Problem-3.

1
Mr. Kamal started his own consulting firm, Kamal Consulting & Co., on August 1, 2015. The
trial balance at August 31 is as follows.
Kamal Consulting & Co.
Trial Balance
August 31, 2015
Account Debit (Tk.) Credit (Tk.)
Cash 55,000
Accounts Receivable 10,000
Supplies 3,000
Prepaid Insurance 12,000
Land 2,40,000
Office Furniture 1,20,000
Motorcycle 60,000
Accounts Payable 5,000
Unearned Service Revenue 15,000
Mortgage Payable 60,000
Kamal’s Capital 4,00,000
Service Revenue 70,000
Salaries Expense 20,000
Rent Expense 30,000
Total 5,50,000 5,50,000
Other data:
(i) A count on August 31 shows Tk. 1,000 of supplies on hand. / Tk. 2,000 of supplies has
been used during the month.
(ii) Travel expense incurred but not paid on August 31, 2015, Tk. 1,000.
(iii) The insurance policy is for 2 years. / Insurance expires at the rate of Tk. 500 per month.
(iv) Tk. 5,000 of the balance in the unearned service revenue account remains unearned at
the end of the month. / Unearned service revenue of Tk. 10,000 was earned prior to August
31, 2015.
(v) Total salary expense for the month was Tk. 25,000. / Salaries of Tk. 5,000 were accrued
(or unpaid) on August 31, 2015.
(vi) The office furniture has a 10-year life with no salvage value and motorcycle has 20-year
life with no salvage value. / Annual depreciation is Tk. 12,000 on office furniture and Tk.
3,000 on motorcycle.
(vii) A utility bill for Tk. 2,000 has not been recorded and will not be paid until next month.
(viii) Invoices representing Tk. 10,000 of services performed during the month have not
been recorded as of August 31, 2015.
(ix) The mortgage interest rate is 10% per year. The mortgage was taken on August 1, 2015.
(x) Total rent expense for the month of August was Tk. 35,000. /Tk. 5,000 rent was accrued
or unpaid for the month of August.

Required:
(i) Prepare the adjusting entries for the month of August.
(ii) Post the adjusting entries to the ledger accounts.
(iii) Prepare an adjusted trial balance at August 31, 2015.
Solution of Problem-3.1

Requirement (i)
Kamal Consulting & Co.
General Journal

Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.)

31-08-2015 Supplies Expense 2,000
Supplies 2,000
[3,000 – 1,000]
31-08-2015 Travel Expense 1,000
Travel Expense Payable 1,000
31-08-2015 Insurance Expense 500
Prepaid Insurance 500
[12,000 ÷ 24]
31-08-2015 Unearned Service Revenue 10,000
Service Revenue 10,000
[15,000 – 5,000]
31-08-2015 Salaries Expense 5,000
Salaries Payable 5,000
31-08-2015 Depreciation Expense 1,000
Accumulated Depreciation – 1,000
Office Furniture
[(1,20,000 ÷ 10) ÷ 12]
31-08-2015 Depreciation Expense 250
Accumulated Depreciation – 250
Motorcycle
[(60,000 ÷ 20) ÷ 12]
31-08-2015 Utilities Expense 2,000
Utilities Payable 2,000
31-08-2015 Accounts Receivable 10,000
Service Revenue 10,000
31-08-2015 Interest Expense 500
Interest Payable 500
[(60,000 × 10%) ÷ 12]
31-08-2015 Rent Expense 5,000
Rent Payable 5,000
 Requirement (ii)
Kamal Consulting & Co.
General Ledger

Cash
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 55,000

Accounts Receivable
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 10,000
31-08-2015 Service Revenue 10,000 20,000

Supplies
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 3,000
31-08-2015 Supplies Expense 2,000 1,000

Prepaid Insurance
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 12,000
31-08-2015 Insurance Expense 500 11,500

Land
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 2,40,000

Office Furniture
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 1,20,000

Motorcycle
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 60,000

Accounts Payable
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 5,000
 Unearned Service Revenue
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 15,000
31-08-2015 Service Revenue 10,000 5,000

Mortgage Payable
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 60,000

Kamal’s Capital
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 4,00,000

Service Revenue
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 70,000
31-08-2015 Unearned Service Revenue 10,000 80,000
31-08-2015 Accounts Receivable 10,000 90,000

Salaries Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 20,000
31-08-2015 Salaries Payable 5,000 25,000

Rent Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Balance 30,000
31-08-2015 Rent Payable 5,000 35,000

Supplies Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Supplies 2,000 2,000

Travel Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Travel Expense Payable 1,000 1,000

Travel Expense Payable

Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Travel Expense 1,000 1,000
 Insurance Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Prepaid Insurance 500 500

Salaries Payable
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Salaries Expense 5,000 5,000

Depreciation Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Accumulated Depreciation- 1,000 1,000
Office Furniture
31-08-2015 Accumulated Depreciation- 250 1,250
Motorcycle

Accumulated Depreciation- Office Furniture

Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Depreciation Expense 1,000 1,000

Accumulated Depreciation- Motorcycle

Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Depreciation Expense 250 250

Utilities Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Utilities Payable 2,000 2,000

Utilities Payable
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Utilities Expense 2,000 2,000

Interest Expense
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Interest Payable 500 500

Interest Payable
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Interest Expense 500 500

Rent Payable
Date Accounts Title Ref. Dr. (Tk.) Cr. (Tk.) Balance (Tk.)
31-08-2015 Rent Expense 5,000 5,000
Requirement (iii)
Kamal Consulting & Co.
Adjusted Trial Balance
As on August 31, 2015
Accounts Title Dr. (Tk.) Cr. (Tk.)
Cash 55,000
Accounts Receivable 20,000
Supplies 1,000
Prepaid Insurance 11,500
Land 2,40,000
Office Furniture 1,20,000
Motorcycle 60,000
Accounts Payable 5,000
Unearned Service Revenue 5,000
Mortgage Payable 60,000
Kamal’s Capital 4,00,000
Service Revenue 90,000
Salaries Expense 25,000
Rent Expense 35,000
Supplies Expense 2,000
Travel Expense 1,000
Travel Expense Payable 1,000
Insurance Expense 500
Salaries Payable 5,000
Depreciation Expense 1,250
Accumulated Depreciation-Off. Furniture 1,000
Accumulated Depreciation-Motorcycle 250
Utilities Expense 2,000
Utilities Payable 2,000
Interest Expense 500
Interest Payable 500
Rent Payable 5,000
Total 5,74,750 5,74,750