Independent University, Bangladesh (IUB)

School of Business and Entrepreneurship (SBE)

Midterm, SPRING 2022
ACN 201, Principles of Accounting
Marks: 20
Instructions:

• Write down your name, ID, Section, page number clearly on the top of your answer script. •
Answer all the questions and sub questions sequentially. Start each answer from a fresh
sheet.
• Take images of the answers to the questions, convert it into pdf (if possible) and upload the
pdf file on the classroom by turning in.
• Find the mark’s distribution after each requirement.
• File uploading is a part of the exam. If you fail to upload files / upload the wrong files /
miss any part of it, you will not get the second chance. Be careful while uploading. • Time:
1hr and 10 minutes for problem solving + extra 10 minutes for file uploading

1. Mr. Musfiq is a Chartered Accountant (CA). He started a new consultancy firm on July 1,
2021. During the first month of operations the following transactions occurred:
July. 1; He invested $ 5,50,000 cash in the firm to start the firm.
,, 10; Paid $ 15,000 cash for 3 years insurance policy starting from the current month. ,, 15;
Purchased furniture for $ 50,000 paying $ 35,000 in cash and for remaining he signed on a 1-
month, 12% Notes Payable.
,, 17; Paid $ 7,000 for office rent.
,, 21; Performed service for a client and received cash of $ 45,000.
“ 26; Performed service for a client but yet to receive $ 15,000.
,, 30; Withdrew $ 2,500 cash for personal use.
,, 31; Received telephone bill from BTCL amounted to $ 2,000.
Required:
a) Journalize the transactions for the month of July 2021. [4]
b) Prepare necessary T accounts [2.75]
c) Prepare a trail balance on July 30, 2021 and prove the arithmetical accuracy of the
accounts. [1.25]
2. Following is the unadjusted trial balance of Mohammad Abdullah’s Electric House for the year
ended December 31, 2021
 Mohammad Abdulla's Electric House
31, December 2021
Unadjusted Trail balance
Cash $200,000

Accounts Receivable 10,000

Supply 1,000

Prepaid Insurance 12,000

Equipment 80,000

Accumulated depreciation-Equipment $5,000

Accounts payable 15,000

Unearned service revenue 6,000

Loan payable 50,000

Owner’s Capital 184,000

Owner’s Drawings 2,000

Service Revenues 55,000

Salaries expense 8,000

Cleaning expense 2,000

$315,000 $315,000

Other data:
1. Supplies on hand revealed at 31, December $300.
2. Prepaid insurance was paid on 1 July 2021 for 12 months.
3. Interest expense due on loan payable for last 4 months. Quarterly interest rate is 3%. 4. Salary
expense per day $500, December 31 is Wednesday. Employees are paid on Monday for the
preceding 5 days work week.
5. One third of the unearned service revenue has been earned.
Requirements:
a) Journalize the adjusting entries for the year ended 31, December 2021. [5]
b) Complete the worksheet for the year ended 31, December 2021. [7]