Tutorial 3

Question 1

The accounting records of Pink Water Trading shows the following adjustments as at 31
December:
i. Revenues from sewerage services of RM900 are earned (the sewerage work is
completed), but is not billed yet.
ii. Supplies in the store are RM450 and supplies account shows a balance of RM3,450.
iii. Accrued telephone and electricity expenses are RM750.
iv. Received a deposit of RM390 for a service, but the service is not rendered to the
customer yet.
v. Accrued salary is RM1,500.
vi. Prepaid insurance which is expired is RM800.

Required:
For each of the above transactions:
a. State whether the transaction is a prepaid expense, accrued expense, unearned revenue
or accrued revenue.
b. State the status of the account before the adjustment as either understated or
overstated.
Question 2

The trial balance for Salsabil Enterprise for the year ended 31 December 2018 is as follows:

Salsabil Enterprise
Trial balance as at 31 December 2018
Account Debit (RM) Credit (RM)
Cash 4,200
Account receivables 20,000
Notes receivables 10,000
Inventory 24,000
Prepaid rental 2,400
Equipment 18,000
Accumulated depreciation-Equipment 4,000
Account payables 26,400
Capital, Salihin 33,200
Sales 176,000
Cost of goods sold 92,000
Wages expenses 40,000
Miscellaneous expenses 24,000
Income tax 5,000
Total 239,600 239,600

Additional information:
i. Accrued interest on notes receivables is RM1,000.
ii. Depreciation on the equipment is RM2,000.
iii. Accrued wages is RM1,200.
iv. Accrued utilities is RM800 (charged to miscellaneous expenses account)
v. Rental which is due RM1,000.
vi. Cash drawings by Salihin is RM2,800.
vii. Cash of RM400 is received from a customer for a debt which was wrongly credited to
the account payables.
Required:
a. Prepare adjusting journal entries for transactions (i) – (iv).
b. Post the adjusting journal entries in (a) to the related ledger accounts as listed in trial
balance. Any account which is not in the list has to be created.
c. Prepare the adjusted trial balance as at 31 December 2018.
d. Prepare the Statement of Comprehensive Income and Statement of changes in equity
for the year ended 31 December 2018.
e. Prepare the Statement of Financial Position as at 31 December 2018.

Question 3

The trial balance of Nan Motor Repairs as at 31 December 2018 and the data needed to
determine year end adjustments are as follows:
Nan Motor Repairs
Trial balance as at 31 December 2018
Account Debit (RM) Credit (RM)
Cash 15,050
Supplies 9,740
Prepaid Insurance 3,900
Equipment 63,000
Accumulated depreciation-Equipment 19,500
Trucks 84,000
Accumulated depreciation-Trucks 52,800
Account payables 8,030
Capital, Quinn 51,600
Drawings, Quinn 36,000
Service revenue 199,900
Wages expense 75,850
Rent expense 19,200
Maintenance expense 18,700
General expense 6,390
Total 331,830 331,830
Adjustment data:

i. Inventory of supplies at 31 December RM1,820

ii. Insurance premiums expired during the year, RM2,100.
iii. Depreciation on equipment during the year, RM10,760.
iv. Depreciation on truck during the year, RM12,400.
v. Wages accrued but not paid at 31 December RM1,400.

Required:
a. Open a ledger account to record the balances from 31 December 2018 trial balance.
b. Prepare the adjusting entries for transaction (i) – (v) of the adjustment data.
c. Post the adjusting entries from requirement (b) to the related ledger accounts which
were opened in requirement (a).
d. Prepare the adjusted trial balance as at 31 December 2018.
e. Prepare the Statement of Comprehensive Income and Statement of changes in equity
for the year ended 31 December 2018.
f. Prepare the Statement of Financial Position as at 31 December 2018.
Question 4

The adjusted trial balance of Lanza Company at the end of its fiscal year is :
LANZA COMPANY
Adjusted Trial Balance
July 31, 2018
Debit Credit
RM RM
Cash 14,840
Account receivable 8,780
Equipment 15,900
Accumulated depreciation 5,400
Account payable 4,220
Unearned rent revenue 1,800
C.J.Lanza, capital 45,200
C.J.Lanza, drawing 16,000
Commission revenue 67,000
Rent revenue 6,500
Depreciation expense 4,000
Salaries expense 55,700
Utilities expense 14,900
130,120 130,120

Required:
a) Prepare the closing entries.
b) Post to C.J.Lanza, capital and Income Summary account.
c) Prepare a post closing trial balance at July 31.
Question 5
The trial balance columns of the work sheet for Undercover Roofing at March 31, 2018.
UNDERCOVER ROOFING
Work sheet
For the month ended March 31, 2018
Trial balance
Debit (RM) Credit(RM)
Cash 2,500
Account receivable 1,800
Roofing supplies 1,100
Equipment 6,000
Accumulated depreciation- Equipment 1,200
Account payable 1,400
Unearned revenue 300
I.Spy, capital 7,000
I.Spy, drawing 600
Service revenue 3,000
Salaries expense 700
Miscellaneous expense 200
12,900 12,900
Other data :
1. A physical count reveals only RM 140 of roofing supplies on hand.
2. Depreciation for March is RM 200.
3. Unearned revenue amounted to RM 130 after adjustment on March 31.
4. Accrued salaries are RM 350.
Required:
a) Enter the trial balance on a work sheet and complete the work sheet.
b) Prepare an income statement and owner’s equity statement for the month of March and a
classified balance sheet at March 31. I.Spy did not make any additional investments in the
business in March.
c) Journalize the adjusting entries from the adjustments columns of the work sheet.
d) Journalize the closing entries from the financial statement columns of the work sheet.
Question 6
Buena Vista Social Club accumulates the following adjustment data at December 31.
1. Revenue of RM1,600 collected in advance has been recognized.
2. Salaries of RM600 are unpaid.
3. Prepaid rent totaling RM500 has expired.
4. Supplies of RM450 have been used.
5. Revenue recognized but unbilled total RM750.
6. Utility expenses of RM250 are unpaid.
7. Interest of RM300 has accrued on a note payable.

Instructions
For each of the above items indicate:
1. The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or
accrued expense).
2. The account relationship (asset/liability, liability/revenue, etc.).
3. The adjusting entry.

Prepare your answer in the tabular form presented below.

Type of Account
Adjustment Relationship Adjusting Entry

Question 7
New Slang Pest Control has the following balances in selected accounts on December 31,
2016.
Accounts Receivable RM 0
Accumulated Depreciation – Equipment 0
Equipment 6,650
Interest Payable 0
Notes Payable 20,000
Prepaid Insurance 2,220
Salaries and Wages Payable 0
Supplies 2,940
Unearned Service Revenue 30,000
All of the accounts have normal balances. The information below has been gathered at
December 31, 2016.
1. Depreciation on the equipment for 2016 is RM1,300.
2. New Slang Pest Control borrowed RM20,000 by signing a 10%, one-year note on
July 1, 2016.
3. New Slang Pest Control paid RM2,220 for 12 months of insurance coverage on
October 1, 2016.
4. New Slang Pest Control pays its employees total salaries of RM11,000 every Monday
for the preceding 5-day week (Monday-Friday). On Monday, December 27, 2016,
employees were paid for the week ending December 24, 2016. All employees worked
the five days ending December 31, 2016.
5. New Slang Pest Control performed disinfecting services for a client in December
2016. The client will be billed RM3,200.
6. On December 1, 2016, New Slang Pest Control collected RM30,000 for disinfecting
processes to be performed from December 1, 2016, through May 31, 2016.
7. A count of supplies on December 31, 2016, indicates that supplies of RM850 are on
hand.

Instructions
Prepare in journal form with explanations, the adjusting entries for the seven items listed for
New Slang Pest Control.

Question 8
Match the statements below with the appropriate terms by entering the appropriate letter code
in the spaces provided.
TERMS:
A. Prepaid Expenses
B. Unearned Revenues
C. Accrued Revenues
D. Accrued Expenses
STATEMENTS:
_____ 1. A revenue not yet recognized; collected in advance.
_____ 2. Office supplies on hand that will be used in the next period.
_____ 3. Interest revenue collected; not yet recognized.
_____ 4. Rent not yet collected; already recognized.
_____ 5. An expense incurred; not yet paid or recorded.
_____ 6. A revenue recognized; not yet collected or recorded.
_____ 7. An expense not yet incurred; paid in advance.
_____ 8. Interest expense incurred; not yet paid.

Question 9
Kidman Company prepares monthly financial statements. Below are listed some selected
accounts and their balances in the September 30 trial balance before any adjustments have
been made for the month of September.
KIDMAN COMPANY
Trial Balance (Selected Accounts)
September 30, 2020
—————————————————————————————————————
Debit Credit
Supplies.................................................................................................... RM 3,200
Prepaid Insurance..................................................................................... 4,200
Equipment................................................................................................ 16,200
Accumulated Depreciation—Equipment................................................. RM1,000
Unearned Rent Revenue.......................................................................... 1,200
(Note: Debit column does not equal credit column because this is a partial listing of selected
account balances)

An analysis of the account balances by the company’s accountant provided the following
additional information:
1. A physical count of supplies revealed RM1,400 on hand on September 30.
2. A two-year life insurance policy was purchased on June 1 for RM3,600.
3. Equipment depreciated RM3,300 per year.
4. The amount of rent received in advance that remains unearned at September 30 is
RM700.
Instructions
Using the above additional information, prepare the adjusting entries that should be made by
Kidman Company on September 30.

Question 10
Mother Hips Garment Company purchased equipment on June 1 for RM90,000, paying
RM20,000 cash and signing a 9%, 2-month note for the remaining balance. The equipment is
expected to depreciate RM18,000 each year. Mother Hips Garment Company prepares
monthly financial statements.

Instructions
(a) Prepare the general journal entry to record the acquisition of the equipment on June 1st.
(b) Prepare any adjusting journal entries that should be made on June 30th.
(c) Show how the equipment will be reflected on Mother Hips Garment Company’s balance
sheet on June 30th.

Question 11
The worksheet for Gibler Rental Company appears below. Using the adjustment data below,
complete the worksheet. Add any accounts that are necessary.

Adjustment data:
(a) Prepaid rent expired during August, RM3.
(b) Depreciation expense on equipment for the month of August, RM8.
(c) Supplies on hand on August 31 amounted to RM6.
(d) Salaries and wages expense incurred at August 31 but not yet paid amounted to RM10.
 GIBLER RENTAL COMPANY
Worksheet
For the Month Ended August 31, 2020

Adjusted Income
Trial Balance Adjustments Trial Balance Statement Balance Sheet

Account Titles Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 20
Accounts Receivable 12
Prepaid Rent 8
Supplies 10
Equipment 50
Accum. Depreciation
— Equipment 10
Accounts Payable 20
Owner’s Capital 29
Owner’s Drawings 2
Rent Revenue 73
Depreciation Expense 6
Rent Expense 4
Salaries and Wages
Expense 20
Totals 132 132
Supplies Expense
Salaries Payable
Totals
Net Income
Totals

Question 12
The account balances appearing on the trial balance (below) were taken from the general
ledger of Speedy Copy Shop at September 30.

Additional information for the month of September which has not yet been recorded in the
accounts is as follows:
(a) A physical count of supplies indicates RM500 on hand at September 30.
(b) The amount of insurance that expired in the month of September was RM400.
(c) Depreciation on equipment for September was RM600.
(d) Rent owed on the copy shop for the month of September was RM750 but will not be
paid until October.

Instructions
Using the above information, complete the worksheet on the following page for Speedy Copy
Shop for the month of September.
 SPEEDY COPY SHOP
Worksheet
For the Month Ended September 30, 2020

Adjusted Income
Trial Balance Adjustments Trial Balance Statement Balance Sheet

Account Titles Debit Credit Debi Credit Debit Credit Debit Credit Debit Credit
t
Cash 3,000
Supplies 1,500
Prepaid Insurance 2,400
Equipment 24,000
Accum. Depreciation
— Equipment 4,800
Accounts Payable 2,400
Notes Payable 4,000
Owner’s Capital 15,600
Owner’s Drawings 2,200
Service Revenue 6,700
Utilities Expense 400
Totals 33,500 33,500
Supplies Expense
Insurance Expense
Depreciation Expense
Rent Expense
Rent Payable
Totals
Net Income
Totals

Question 13
Prepare the necessary closing entries based on the following selected accounts.

Accumulated Depreciation RM10,000

Depreciation Expense 6,000
Owner’s Capital 20,000
Owner’s Drawings 9,000
Salaries and Wages Expense 19,000
Service Revenue 40,000

Question 14
At March 31, account balances after adjustments for Wide Screen are as follows:
Account Balances
Accounts (After Adjustment)
Cash RM 11,000
Supplies 4,000
Equipment 50,000
Accumulated Depreciation—Equipment 12,000
Accounts Payable 5,000
Owner’s, Capital 20,000
Owner’s, Drawings 8,000
Ticket Revenue 59,000
Service Revenue 55,000
Advertising Expense 18,800
Supplies Expense 17,000
Depreciation Expense 4,000
Rent Expense 26,000
Salaries and Wages Expense 24,000
Utilities Expense 5,200

Instructions
Prepare the closing journal entries for Wide Screen.