Assignment 2.

Learning Objective:
Prepare adjusting entries.
Income statement (SERVICE SECTOR, TRADING ACTIVITIES)
Balance sheet.
Closing entries.
Q No 1: Imran and co. presented following data on Sep 30, 2002
Title of account
Cash
A/c Receivable
Stationary
Insurance expense
Equipment
Furniture
Traveling expense
A/c payable
Allowance for depreciation- equipment
Allowance for depreciation-furniture
Service revenue
Salaries expense
Advertising expense
Drawing
Interest expense
Capital

Debit
51,000
25,600
1500
300
68,000
69300
5000

Credit

14,300
5,000
18,600
85,300
24000
4500
17000
1200
144,200
267400

267400
Additional data:
1. Bad debts estimated 5% of A/c recivable (Bad Debt Exp (Dr.), Allow. for bad
debt(Cr.)
2. Depreciation on furniture 10%
3. Depreciation on equipment 10%
4. Salaries outstanding Rs.2700
5. Interest payable Rs. 400
6. Stationary used by company Rs.900
7. Traveling expense is outstanding Rs.1000
Required:
i.
ii.
iii.
iv.

prepare adjusting entries

prepare adjusted trial balance
prepare income statement
prepare balance sheet

Q No.2 The adjusted trial balance of Marineland Travel Designers at December 31,
20X6, follows.
MARINELAND TRAVEL DESIGNERS
Adjusted Trial Balance
December 31, 20X6
Cash
Accounts receivable
Supplies
Prepaid rent
Office equipment
Accumulated depreciationoffice equipment
Office furniture
Accumulated depreciationoffice furniture
Accounts payable
Interest payable
Unearned service revenue
Note payable
Ken Sorley, capital
Ken Sorley, drawings
Service revenue
Depreciation expenseoffice equipment
Depreciation expenseoffice furniture
Salary expense
Rent expense
Interest expense
Utilities expense
Insurance expense
Supplies expense
Total

$ 1,320
4,920
2,300
1,600
20,180
$

4,350

37,710
4,870
4,740
830
620
13,500
26,090
29,000
120,910
6,680
2,370
39,900
17,400
3,100
2,670
3,810
2,950
$175,910 $175,910

Required
1. Prepare Marineland's 20X6 income statement and statement of owner's equity and
year-end balance sheet.
2.

a. Which financial statement reports Marine lands results of operations?

Were operations successful during 20X6? Cite specifics from the financial
statements to support your evaluation.
b. Which statement reports the company's financial position? Does Marine
lands financial position look strong or weak? Give the reason for your
evaluation.
Q No.3 The unadjusted trial balance of Christine Salomon, at July 31, 20X2, and the
related month-end adjustment data follow.
CHRISTINE SALOMON, CPA
Trial Balance
July 31, 20X2
Cash
Accounts receivable
Prepaid rent
Supplies
Furniture
Accumulated depreciation-Furniture
Accounts payable
Salary payable
Salomon, capital
Salomon, Drawing
Accounting service revenue
Salary expense
Rent expense
Utilities expense
Depreciation expense
Supplies expense
Total

$ 5,600
11,600
4,000
800
28,800
$ 3,500
3,450
39,050
4,000
11,750
2,400
550

$57,750 $57,750

Adjustment data:
a. Accrued accounting service revenue at July 31, $900.
b. Prepaid rent expired during the month. The unadjusted prepaid balance of $4,000
relates to the period July through October.
c. Supplies on hand at July 31, $400.
d. Depreciation on furniture for the month. The estimated useful life of the furniture
is four years.

e. Accrued salary expense at July 31 for one day only. The five-day weekly payroll
is $1,000.
Required
1. Prepare work sheet at July 31, 20X5.
2. Prepare the income statement and the statement of owner's equity for the month
ended July 31, 20X2, and the balance sheet at that date.
Q No.4 The trial balance of Cohen Construction Co. at June 30, 20X3, follows.
COHEN CONSTRUCTION CO.
Trial Balance
June 30, 20X3
Cash
Accounts receivable
Supplies
Prepaid insurance
Equipment
Accumulated depreciationequipment
Building
Accumulated depreciationbuilding
Land
Accounts payable
Interest payable
Wage payable
Unearned service revenue
Note payable, long-term
Lynn Cohen, capital
Lynn Cohen, withdrawals
Service revenue
Depreciation expenseequipment
Depreciation expensebuilding
Wage expense
Insurance expense
Interest expense
Utilities expense
Advertising expense
Supplies expense
Total

$ 21,200
37,820
17,660
2,300
32,690
$ 26,240
42,890
10,500
28,300
22,690

10,560
22,400
79,130
4,200
20,190

3,200

1,110
340
$191,710 $191,710

Additional data at June 30, 20X3:

a.
b.
c.
d.
e.
f.
g.
h.

Depreciation: equipment, $630; building, $370.

Accrued wage expense, $240.
Supplies on hand, $14,370
Prepaid insurance expired during June, $500.
Accrued interest expense, $180.
Unearned service revenue earned during June, $4,970.
Accrued advertising expense, $100 (credit Accounts Payable).
Accrued service revenue, $1,100.

Required
Complete Cohen Construction's work sheet for June.
Q No.5 The adjusted trial balance of Gallo Shipping & Handling at June 30, 20X9, after
all adjustments, follows.
GALLO SHIPPING & HANDLING
Adjusted Trial Balance
June 30, 20X9
Cash
Accounts receivable
Supplies
Prepaid insurance
Equipment
Accumulated depreciationequipment
Building
Accumulated depreciationbuilding
Land
Accounts payable
Interest payable
Wages payable
Unearned service revenue
Note payable, longterm
Linda Gallo, capital
Linda Gallo, withdrawals
Service revenue
Depreciation expenseequipment
Depreciation expensebuilding
Wage expense
Insurance expense

$ 12,350
26,470
31,290
3,200
135,800
$ 16,480
34,900
16,850
30,000
38,400
1,490
770
2,300
97,000
58,390
45,300
139,860
7,300
3,970
21,470
3,100

Interest expense
Utilities expense
Supplies expense
Total

8,510
4,300
3,580
$371,540 $371,540

Adjusting data at June 30, 20X9, which have all been incorporated into the adjusted trial
balance figures:
a.
b.
c.
d.
e.
f.
g.

Prepaid insurance expired during the year, $2,200.

Accrued interest expense, $540.
Accrued service revenue, $940.
Unearned service revenue earned during the year, $7,790.
Accrued wage expense, $770.
Depreciation for the year: equipment, $7,300; building, $3,970.
Supplies used during the year, $3,580.

Required:Prepare Gallo's income statement and statement of owner's equity for the year
ended June 30, 20X9, and the classified balance sheet on that date.

Q No.6 Afzal company provided information on December 31,2004.

TITLE OF ACCOUNT
DEBIT
Plant assets
Rs.37,50,000
Cash
100,000
Account Receivable
162,500
Merchandise Inventory-beg
62500
Sales return
7000
Purchases
12,45000
Transportation in
20000
Salaries expense
145000
Prepaid advertising
20000
Directors fee
2,15000
Sales revenue
Commission income
Accumulated depreciation
Retained earning
Paid up capital
10% debentures payable
Account payable
Purchases return
57,27,000
Additional information:

CREDIT

18,75000
20000
350000
367500
25,00000
500000
112500
2000
57,27,000

1. Merchandise Inventory-ending Rs.45,000

2. Depreciation 10% on fixed assets
3. Tax rate is 30%
Required:
a) Income Statement showing EBIT
b) Balance Sheet

Q No.7 Delux company authorized capital is 500,000 shares of Rs.10 each. Following
information provided on December 31,2004.
TITLE OF ACCOUNT
Cash
Account receivable
Account payable
Merchandise inventory
Purchases
Paid up capital
Transportation
Salaries expense
Sales
Building
Auditors fee
Furniture
Retained earnings
Fire insurance
Utility expenses

DEBIT
120,000
155,000

CREDIT
145,000

125,000
1500,000
1800,000
20,000
120,000
1830,000
1800,000
70,000
50,000
225,000
10,000
30,000
4000,000

Additional information:
1. Merchandise Inventory ending Rs.140,000
2. Provide depreciation on furniture 20% and building at 2%.
3. Income tax 40%

4000,000

Required:
a) Income Statement
b) Balance Sheet

Q-8 Prepare Balance Sheet from the given data, but be careful, every item will not be
appeared in Balance Sheet.
Land
Building
A/c payable
Cash
Note payable
Sales
Office supplies
Bank
A/c receivable
Amir-capital
Salaries payable
Short-term investment
Office salaries expense
Prepaid advertising
Commission revenue

25000
125000
30000
15000
25800
550000
5000
17000
15000
?
32500
58000
12500
36000
256900

Q-9 An incorrect Balance sheet of Ahmad Merchant is given here, your are required to
prepare correct and classified Balance Sheet on December 31,2002.
Q A/c payable
A/c receivable
Building
Cash
Salman-capital

14000
800
52000
9200
?

Land
Machinery
Note Payable
Salaries Payable
Supplies

Q-10 Following Balance Sheet presented by Sajid and sons on March 31, 2002

68000
65000
29000
3000
400

ASSETS
CURRENT ASSETS
CASH
A/C RECEIVABLE
NOTE RECEIVABLE
PREPAID ADVERTISING
FIXED ASSETS
EQUIPMENT
BUILDING
TOTAL ASSETS

EQUITIES
LIABILITIES
125,000A/C PAYABLE
45000LOAN FROM AKRAM
25000NOTE PAYABLE
2500
OWNER'S EQUITY
CAPITAL
65000
450,000
712,500
EQUITIES

85000
100,000
25000

502500

712500

Following transactions occurred during the month of April

1.
2.
3.
4.

Collected from customer Rs. 15000

Paid to supplier Rs. 65000
Note receivable matured and received Rs.10000
Sajid invest additional capital in business in the form of cash Rs.100,000 and
equipment Rs.25000
5. Sajid obtained bank loan from Standard Chartered on five year term Rs. 200,000
6. Note payable paid by firm Rs.5000
7. Sajid withdrew Cash Rs. 20,000 for personal use.
Required:
1. Prepare Journal entries for the above transactions
2. Draw General ledger for the accounts effected
3. Prepare Balance Sheet as at April 30th,2002

Q No. 11 The Trial Balance from the given data of Funfood Enterprises on August
31st,2005.

Prepaid insurance
Cash
Office stationary
Sales revenue
Commission income
Office salaries
Capital- Haroon
Drawing-Haroon
Equipment
A/c payable
Utility expense
Bank overdraft
Insurance expense
Note payable
Building
Prepaid rent
A/c Receivable
Loan from bank
Marketable securities
Interest expense
Operating expenses

4500
15600
5600
1175000
25000
56000
575000
45000
82000
56000
12000
75000
5000
32000
750000
40000
60000
300000
50000
12000
1100,300

Prepare Income Statement and Balance Sheet.

Q No.12 Following Trial balance and adjustment data is presented by Saleem , a soletrader at the end of its financial year Dec.31,2002.

TITLE
OF
ACCOUNT
CASH
A/C RECEIVABLE
EQUIPMENT
ADVERTISING EXPENSE
PREPAID RENT
MISCELLANEOUS EXPENSE
OFFICE SUPPLIES EXPENSE
INTEREST EXPENSE
MDS. INVENTORY-BEGINNING
PURCHASES
CARRIAGE IN
SALES RETURN
SALARIES EXPENSE
SALES REVENUE
PURCHASES RETURN
PURCHASES DISCOUNT
COMMISSION INCOME
A/C PAYABLE
CAPITAL-SALEEM
NOTE PAYABEL
BANK OVERDRAFT
LONG-TERM LOAN
TOTAL

DEBIT
5,000
20,000
32,800
3,000
6,000
2,000
1,000
500
7,000
25,000
200
900
8,000

111,400

CREDIT

40,000
800
300
2,500
5,500
39,800
5,000
7,500
10,000
111,400

ADJUSTMENT DATA ON DEC.31,2002:

1. Depreciation charged @ 25% on non-current assets
2. Income tax 34%
3. Merchandise Inventory-ending Rs.1700
Required:
1. Prepare Income Statement
2. Prepare Balance Sheet
3. Prepare closing entries.

Q No.13 Saleem provided following Trial Balance on December 31, 2002 and
adjustment data.

TITLE
OF
ACCOUNT
CASH
A/C RECEIVABLE
OFFICE EQUIPMENT
MARKETING EXPENSE
PREAPID ADVERTISING
OTHER EXPENSE
OFFICE SUPPLIES EXPENSE
INTEREST EXPENSE
MDS. INVENTORY-BEGINNING
PURCHASES
TRANSPORTATION-IN
SALES RETURN
SALARIES EXPENSE
SALES REVENUE
PURCHASES RETURN
PURCHASES DISCOUNT
INTEREST INCOME
A/C PAYABLE
CAPITAL-SALEEM
SHORT-TERM LOAN
BILL PAYABLE
LONG-TERM LOAN
TOTAL

Adjustment data
1. Depreciation on non-current assets @ 20%
2. Income Tax 40%
3. Merchandise Inventory-ending 12500
Required:
1. Prepare Income Statement
2. Prepare Balance sheet
3. Prepare closing entries

DEBIT

CREDIT
45,000
75,000
325,000
12,500
8,500
6,000
3,500
16,000
27,800
275,000
22,000
12,000
65,000

893,300

475,000
1800
4500
27,000
35,000
222,300
55,000
22,700
50,000
893,300