Reference no: EM132857303
Question - Glove Bhd sells rubber gloves and operates in Bukit Kayu Hitam. The company closes its accounts on 31 December each year. The following information is related to the company's equity and debt investments for the financial year 2019.
Date Transaction
2 January Glove Bhd purchased RM2,000,000 of 10% bonds from Purnama Bhd for RM2,162,200. The bonds mature in five years and provide the bondholders with a yield of 8%. The interest is paid by Purnama Bhd every 30 June and 1 January. The bonds have been classified as held for collection (HFC).
21 February Glove Bhd purchased 100,000 units ordinary shares of Bulan Bhd for RM1.25 per share. The brokerage and clearance fee for the purchase of the shares is 3% of the value of the shares. Glove Bhd foresees that the share price of Bulan Bhd shall increase in the next few years and thus, the company intended to hold the shares for at least 18 months.
30 November Due to a shortfall of cash, Glove Bhd sold its investments in Purnama Bhd at RM2,050,0000. The selling price includes accrued interest.
31 December Bulan Bhd declared a dividend of RM0.05 per share, payable in January 2020. The share price of Bulan Bhd was traded at RM1.45 on this date. REQUIRED:
Required -
(a) Prepare, all the related journal entries for Glove Bhd for the financial year 2019.
(b) Briefly discuss whether (i) trade receivable and (ii) bank overdraft fulfill the definition of financial assets.
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