PRACITCE MATERIAL for Lecture # 5 to 7

Q No 1: Imran and co. presented following data on Sep 30, 2002

Title of account Debit Credit

Cash 51,000
A/c Receivable 25,600
Stationary 1500
Insurance expense 300
Equipment 68,000
Furniture 69300
Traveling expense 5000
A/c payable 14,300
Allowance for depreciation- equipment 5,000
Allowance for depreciation-furniture 18,600
Service revenue 85,300
Salaries expense 24000
Advertising expense 4500
Drawing 17000
Interest expense 1200
Capital 144,200
267400 267400
Additional data:
a) Bad debts estimated 5% of A/c receivable
b) Depreciation on furniture 10%
c) Depreciation on equipment 10%
d) Salaries outstanding Rs.2700
e) Interest payable Rs. 400
f) Stationary used by company Rs.900
g) Traveling expense is outstanding Rs.1000

Required: Prepare adjusting entries

Q No.2 The unadjusted trial balance of Christine Salomon, at July 31, 2002, and the related
month-end adjustment data follow.

CHRISTINE SALOMON, CPA

Trial Balance
July 31, 2012

Cash Rs. 5,600

Accounts receivable 11,600
Prepaid rent 4,000
Supplies 800
Furniture 28,800
 Accumulated depreciation-Furniture Rs. 3,500
Accounts payable 3,450
Salomon, capital 39,050
Salomon, Drawing 4,000
Accounting service revenue 11,750
Salary expense 2,400
Utilities expense 550

Rs.57,750 Rs.57,750
Total

Adjustment data:

a. Accrued accounting service revenue at July 31, Rs.900.

b. Uncollectable expense estimated for the year 2% of A/c Receivable.
c. Prepaid rent expired during the month. The unadjusted prepaid balance of Rs.4,000 relates to
the period July through October.
d. Supplies on hand at July 31, Rs.400.
e. Depreciation on furniture for the month. The estimated useful life of the furniture is four years.
f. Accrued salary expense at July 31 for one day only. The five-day weekly payroll is Rs.1,000.
g. Utilities expense due Rs.50

Required: Prepare adjusting entries

Q No.4The trial balance of Cohen Construction Co. at June 30, 2013, follows.

COHEN CONSTRUCTION CO.

Trial Balance
June 30, 2013

Cash Rs. 21,200

Accounts receivable 37,820
Supplies 17,660
Prepaid insurance 2,300
Equipment 32,690
Accumulated depreciation—equipment Rs. 26,240
Building 42,890
Accumulated depreciation—building 10,500
Land 28,300
Accounts payable 22,690
Unearned service revenue 10,560
Note payable, long-term 22,400
 Lynn Cohen, capital 79,130
Lynn Cohen, withdrawals 4,200
Service revenue 20,190
Wage expense 3,200
Utilities expense 1,110
Advertising expense 340

Rs.191,710 Rs.191,710
Total

Additional data at June 30, 2013:

a. Depreciation: equipment, 10% BV method; building, 5% straight line method.

b. Accrued wages expense, Rs.240.
c. Supplies on hand, Rs.14,370
d. Prepaid insurance expired during June, Rs.500.
e. Accrued interest expense, Rs.180.
f. Unearned service revenue earned during June, Rs.4,970.
g. Accrued advertising expense, Rs.100.
h. Accrued service revenue, Rs.1,100.

Required: Prepare adjusting entries

Q No.5 The adjusted trial balance of Gallo Shipping & Handling at June 30, 2009, after all
adjustments, follows.

GALLO SHIPPING & HANDLING

Adjusted Trial Balance
June 30, 2009

Cash Rs. 12,350

Accounts receivable 26,470
Supplies 31,290
Prepaid insurance 3,200
Equipment 135,800
 Accumulated depreciation—equipment Rs. 16,480
Building 34,900
Accumulated depreciation—building 16,850
Land 30,000
Accounts payable 38,400
Interest payable 2,260
Unearned service revenue 2,300
Note payable, long–term 97,000
Linda Gallo, capital 58,390
Linda Gallo, withdrawals 45,300
Service revenue 139,860
Wage expense 28,770
Insurance expense 7,070
Interest expense 8,510
Utilities expense 7,880
Rs.371,540 Rs.371,540
Total

a. Prepaid insurance expired during the year, Rs.2,200.

b. Accrued interest expense, Rs.540.
c. Accrued service revenue, Rs.940.
d. Unearned service revenue earned during the year, Rs.1,500.
e. Accrued wage expense, Rs.770.
f. Depreciation for the year: equipment 10% straight line, building 5% book value.
g. Supplies used during the year, Rs.3,580.

Required:

a.Prepare Adjusting Entries

b. Prepare Income Statement

c. Prepare Balance Sheet

Q.6: The trial balance of Law Office of Pat Hamilton prepared at April 30, 2010. The business adjusts
and closes its accounts at the end of each month.

Law Office of Pat Hamilton

Trial Balance
April 30, 2010
Title of Accounts Dr Cr
Rs.10,06
Cash 0
 Unexpired Insurance 3,000
Notes Receivable 4,800
Office Supplies 1,460
Office Equipment 26,400
Notes Payable 16,000
Unearned legal fees 15,020
Pat Hamilton Capital 20,000
Pat Hamilton Drawing 3,000
Legal Fees earned 1,580
Salaries expense 2,680
Misc. expense 1,200
Rs.52,60 Rs.52,60
0 0

Additional Data for April 30, 2010:

a. Accrued Interest on Notes Payable amounts to Rs. 200.

b. Salaries earned by the office staff but not yet recorded or paid amounted to Rs. 970.
c. Clients made advance payments against the legal fees. During April, Rs. 4,700 of these advances
was earned by the business.
d. Some clients were not billed (legal fees) until all services relating to their matter have been
rendered. As of April 30, services of Rs. 2,780 have been rendered to these clients but had not
been yet recorded.
e. An insurance policy was purchased on April 01. The premium of Rs. 3,000 for the six months was
paid.
f. On April 01, three months’ rent of Rs. was paid in advance.
g. Office supplies on hand at April 30 amounted to Rs. 800.
h. Office equipment purchased on April 1 is being depreciated over an estimated life of 10 years.

Required:

1. Prepare adjusting entries.

Q.7: Island Hopper is an airline providing passenger and freight services. The accounts are adjusted
and closed each month. At June 30 the trial balance shown below was prepared from the ledger.

Island Hopper
Trial Balance
June 30, 2010
Title of Accounts Dr Cr
Cash Rs.23,600
Accounts Receivable 7,200
Prepaid rent 9,600
Unexpired Insurance 21,000
Aircraft 1,200,000
Accumulated Rs.380,00
Depreciation:Aircraft 0
Notes Payable 600,000
Unearned Passenger revenue 60,000
Mary Earheart Capital 230,850
Mary Earheart Drawing 7,000
Freight Revenue 130,950
Fuel Expense 53,800
Salaries expense 66,700
Maintenance Expense 12,900
Rs.1,401,80
0 1,401,800

Additional Data for June 30, 2010:

a. The aircraft is being depreciated over a period of 10 years.

b. Out of total unearned revenue, Rs. 38,650 was earned during the month.
c. Salaries earned by the employees but not yet paid amount to Rs. 3,300 at June 30.
d. Accrued interest on Notes payable amounts to Rs. 5,000 at June 30.
e. Accrued freight revenue amounts to Rs. 4,600 in June.
f. Three months rent Rs. 14,400 had been paid in advance on May 1.
g. On April 1, a 12 months insurance policy had been purchased for Rs. 25,200.

Required:

1. Give the adjusting entries.

Q No.8 The adjusted trial balance of Marineland Travel Designers at December 31, 2016,
follows.

MARINELAND TRAVEL DESIGNERS

Adjusted Trial Balance
December 31, 2016

Cash Rs. 1,320

Accounts receivable 4,920
Supplies 2,300
Prepaid rent 1,600
Office equipment 20,180
Accumulated depreciation—office equipment Rs. 4,350
Office furniture 37,710
Accumulated depreciation—office furniture 4,870
Accounts payable 4,740
Interest payable 830
Unearned service revenue 620
Note payable 13,500
Ken Sorley, capital 26,090
Ken Sorley, drawings 29,000
Service revenue 120,910
Depreciation expense—office equipment 6,680
Depreciation expense—office furniture 2,370
Salary expense 39,900
Rent expense 17,400
Interest expense 3,100
Utilities expense 2,670
Insurance expense 3,810
Supplies expense 2,950
Rs.175,910 Rs.175,910
Total

Required

1. Prepare Marineland's 2016 income statement and year-end balance sheet.

 AMOS FARADAY, CONSULTANT
Adjusted Trial Balance
December 31, 2010

Adjusted Trial Balance

Account Debit Credit

Cash Rs.11,700
Accounts receivable 1,500
Supplies 100
Equipment 2,000
Accumulated depr.—equipment Rs.
Furniture 3,600
Accumulated depr.—furniture
Accounts payable 3,600
Salary payable 500
Unearned service revenue 600
Amos Faraday, capital 14,000
Amos Faraday, withdrawals 1,600
Service revenue 3,200
Rent expense 500
Utilities expense 200
Salary expense 500
Depreciation expense—equipment 50
Depreciation expense—furniture 60
Supplies expense 200
Rs.22,010 Rs.22,010
Total

Required

a. Prepare Income Statement

b. Prepare balance sheet at December 31.
Q No.10 Data for the unadjusted trial balance of Links Resorts at December 31, 2012, follow:

Cash Rs. 3,000 Horst Schulz, capital Rs.49,100

Other current assets 9,400 Horst Schulz, withdrawals 51,800

Property, plant, Service revenue 93,600

and equipment 66,200 Salary expense 42,700

Accumulated depreciation 21,800 Depreciation expense

Accounts payable 6,100 Supplies expense

Salary payable Insurance expense

Unearned service revenue 5,300 Utilities expense 2,800

Adjusting data at the end of the year include the following:

a. Unearned service revenue that has been earned, Rs.3,600.

b. Accrued service revenue, Rs.8,100
c. Supplies used in operations, Rs.600.
d. Accrued salary expense, Rs.1,400.
e. Insurance expense, Rs.1,800.
f. Depreciation expense, Rs.2,900.

Required

 Prepare adjusting entries and Trial Balance after all adjustments.

 Prepare an income statement.
Q No.11 The trial balance of Cohen Construction Co. at June 30, 20X3, follows.

COHEN CONSTRUCTION CO.

Trial Balance
June 30, 2013

Cash Rs. 21,200

Accounts receivable 37,820
Supplies 17,660
Prepaid insurance 2,300
Equipment 32,690
Accumulated depreciation—equipment Rs. 26,240
Building 42,890
Accumulated depreciation—building 10,500
Land 28,300
Accounts payable 22,690
Unearned service revenue 10,560
Note payable, long-term 22,400
Lynn Cohen, capital 79,130
Lynn Cohen, withdrawals 4,200
Service revenue 20,190
Wage expense 3,200
Utilities expense 1,110
Advertising expense 340
Supplies expense
Rs.191,710 Rs.191,710
Total

Additional data at June 30, 2013:

1. Equipment’s life is 5 years, building’s life, Rs.370.

2. Actual wage expense was found as Rs.3,000.
3. Supplies used, Rs.14,370
4. Prepaid insurance ending balance, Rs.800.
5. Accrued interest expense, Rs.180.
6. Unearned service revenue ending balance, Rs.4,970.
7. Accrued advertising expense, Rs.100
8. Accrued service revenue, Rs.1,100.

Required

a) Prepare adjusting entries

b) Income Statement
c) Balance Sheet.
d) Pass closing entries
Q No.12 The trial balance of Allianz Publishing at August 31, 20X9, and the data needed for the month-end
adjustments follow:

ALLIANZ PUBLISHING
Trial Balance
August 31, 20X9

Account
Number Account Title Debit Credit

Cash Rs. 23,800

Accounts receivable 15,560
Prepaid rent 1,290
Supplies 900
Equipment 15,350
Accumulated depreciation—equipment Rs. 12,800
Building 89,900
Accumulated depreciation—building 28,600
Accounts payable 4,240
Salary payable
Unearned service revenue 8,900
Lou Kraft, capital 71,920
Lou Kraft, withdrawals 4,800
Service revenue 27,300
Salary expense 1,100
Rent expense
Utilities expense 410
Depreciation expense—equipment
Depreciation expense—building
Advertising expense 650
Supplies expense
Rs.153,760 Rs.153,760
Total

Adjustment data:

a. Unearned commission revenue still unearned at August 31, Rs.6,500.

b. Prepaid rent still in force at August 31, Rs.1,050.
c. Supplies used during the month, Rs.340.
d. Depreciation on equipment for the month, Rs.370.
e. Depreciation on building for the month, Rs.130.
f. Accrued salary expense at August 31, Rs.460.

Required

a) Prepare adjusting entries

 b) Income Statement
c) Balance Sheet.
d) Pass closing entries

Q No.14 The accounts of Martinez Political Consulting at December 31, 2016, follow:

Accounts payable Rs. 5,100 Angel Martinez, capital,

Accounts receivable 6,600 December 31, 20X5 Rs. 59,800
Accumulated depreciation— Angel Martinez, withdrawals 50,400
building 37,800 Note payable, long-term 27,800
Accumulated depreciation— Other assets 3,600
computers 11,600 Other current liabilities 4,700
Advertising expense 2,200 Prepaid insurance 1,100
Building 104,400 Prepaid rent 6,600
Cash 16,500 Salary expense 24,600
Service revenue 93,500 Salary payable 3,900
Computers 22,700 Supplies 2,500
Depreciation expense 1,300 Supplies expense 5,700
Insurance expense 800 Unearned service
Interest payable 600 revenue 5,400
Interest expense 1,200

Required: All adjustments have been journalized and posted, but the closing entries have not yet been made.
Prepare the company's classified balance sheet in report format at December 31, 20X6. Show totals for total
assets, total liabilities, and total liabilities and owner's equity.

Q No.15The following trial balance has been extracted from the ledger of A Albert on 30th June 1988.

A Albert

Trail balance as at 30th June 1988

Debit Credit
$ $
Cash----------------------------------------------------- 20
Drawings------------------------------------------------------ 210
Insurance----------------------------------------------------- 870
Cartage outwards-------------------------------------------- 790
Advertising expense---------------------------------------------------- 1,730
Building-------------------------------------------------------- 20,000
Land------------------------------------------------------------ 30,000
Cost of good sold--------------------------------------------- 124,630
Cash at bank--------------------------------------------------- 1,640
Furniture------------------------------------------------------- 3,000
Interest on mortgage----------------------------------------- 800
Return inwards------------------------------------------------ 2,900
Discount allowed--------------------------------------------- 370
Account receivable------------------------------------------ 8,600
Inventory ( closing )------------------------------------------- 52,700
Rent----------------------------------------------------------- 1,900
Salaries-sales------------------------------------------------- 27,700
Shop equipment---------------------------------------------- 8,500
Goodwill-------------------------------------------------------- 15,000
Shares in XYZ Ltd-------------------------------------------- 10,000
Bad debts.----------------------------------------------------- 80
Capital - A Albert-------------------------------------------- 40,840
Account payable--------------------------------------------- 4,620
Discount received-------------------------------------------- 180
loan on mortgage--------------------------------------------- 10,000
Sales----------------------------------------------------------- 250,600
Provision for doubtful debts.-------------------------------- 100
Accumulated depreciation on building-------------------- 2,000
Accumulated depreciation on furniture------------------- 600
Accumulated depreciation on shop equipment---------- 2,500
311,440 311,440

Adjustments:
1)

2) Prepaid advertising $40

3) Salaries outstanding $150

4) Provision for doubtful debts to be 3% of account receivable

5) Depreciation on building to be 5% straight line.

6) Depreciation on furniture to be 20% straight line.

7) Depreciation on shop equipment to be 25% reducing balance
Prepare:
a) Income Statement
b) Balance Sheet.

Q No.16 The following trial balance has been extracted from J.O'Shea's ledger:

J. O'Shea

Trial Balance as at 30 June 1988

Debit Credit

$ $
Insurance expense 570

Rent expense 310

Discount Allowed 680

Travelling expense 50

Purchases 25240

cash at Bank 800

Sales Salaries 13400

Sales Return 1620

Carriage Outwards 850

Land 10000

Building 25000

Office Salaries 24340

Account Receivable 10000

Carriage Inwards 390

Bad Debts 1000

Drawings 200

Delivery Vehicle 12000

Interest on Mortgage 1850

Inventory(beginning) 15000

Loss on disposal of delivery vehicle 100

Printing & Stationery 720

Commission Income 3350

Rental Income 5000

Purchase Return 2490

Account Payable 8700

Provision for Doubtful Debts 80

 Sales 68680

Acc: Dep on Bldg 2500

Capital- J.O'Shea 30000

Loan on Mortgage 20000

Discount Received 320

Acc: Dep on Delivery Vehicle 3000

144120 144120
Adjustments:
1) Inventories on hand at 30 June 1988, $20,000
2) Provision for doubtful debts to be 1% of A/C Receivable
3) Sale Salaries still owing $80
4) Commission still to be received, $190
5) Insurance expense includes an amount $70 related to July 1998.
6) Rental income includes an amount of $50 related to August 1998.
7) Depreciation on building at 5% on cost, on delivery vehicle at 30% diminishing balance.

REQUIRED:
Prepare Income Statement & Balance Sheet

Q No.17 The following trial balance was extracted from the books of R Giggs at the close of
businesson 28th February 2007.
Dr Cr
$ $
Purchases and sales 92,800 157,165
Cash at bank 4,100
Cash in hand 324
Capital account 1stMarch 2016 11,400
Drawings 17,100
Office furniture 2,900
Rent 3,400
Wages and salaries 31,400
Discounts 820 160
A/C Rec and A/C Pay 12,316 5,245
Inventory 1 March 2016 4,120
Provision for doubtful debts 1 March 2016 405
Delivery van 3,750
Van running costs 615
Bad debts written off 730
174,375 174,375
Notes:
(a) Inventory 28 February 2017 $2,400.
(b) Wages and salaries accrued at 28 February 2017 $340.
(c) Rent prepaid at 28 February 2017 $230.
(d) Van running costs owing at 28 February 2017 $72.
(e) Increase the provision for doubtful debts by $91.
(f) Provide for depreciation as follows: Office furniture $380; Delivery van $1,250.
Required:
Draw up the Income Statement for the year ending 28 February 2017 togetherwith a balance
sheet as on 28 February 2017.

Q No.18 Mr Chai has been trading for some years as a wine merchant. The following list
ofbalances has been extracted from his ledger as at 30thApril 2007, the end of his most
recentfinancial year.

$
Capital 83,887
Sales 259,870
A/c Payable 19,840
Returns out 13,407
Provision for doubtful debts 512
Discounts allowed 2,306
Discounts received 1,750
Purchases 135,680
Returns inwards 5,624
Carriage outwards 4,562
Drawings 18,440
Carriage inwards 11,830
Rent expense………………………………………………………………………..20,000
Insurance expense…………………………………………………………………. 5,973
Heating and lighting 11,010
Postage, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Inventory as at 1stMay 2006 15,654
A/C Receivable 24,500
Fixtures and fittings – at cost 120,740
Provision for depreciation on fixtures and fittings – as at 30 April 2007 63,020
Depreciation 12,074
‘
The following additional information as at 30 April 2007 is available:
(a) Inventory at the close of business was valued at $17,750.
(b) Insurances have been prepaid by $1,120.
(c) Heating and lighting is accrued by $1,360.
(d) Rent has been prepaid by $5,435.
(e) The provision for doubtful debts is to be taken at 3% of trade debtors.

Required:
Prepare Mr Chai’s Income Statement for the year ended 30 April 2007 and a balancesheet as at
that date.
Q-19 Prepare Balance Sheet from the given data, but be careful, every item will
not be appeared in Balance Sheet.

Land 25000
Building 125000
A/c payable 30000
Cash 15000
Note payable 25800
Sales 550000
Office supplies 5000
Bank 17000
A/c receivable 15000
Amir-capital ?
Salaries payable 32500
Short-term investment 58000
Office salaries expense 12500
Prepaid advertising 36000
Commission revenue 256900

Q-20 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 Land

14000 68000
A/c receivable 800 Machinery
Building 65000
52000 Note Payable
Cash 29000
9200 Salaries Payable
Salman-capital ? 3000
Supplies
400

Q-21 Following Balance Sheet presented by Sajid and sons on March 31, 2002

ASSETS EQUITIES

CURRENT ASSETS LIABILITIES

CASH 125,000 A/C PAYABLE 85000

A/C RECEIVABLE 45000 LOAN FROM AKRAM 100,000

NOTE RECEIVABLE 25000 NOTE PAYABLE 25000

PREPAID ADVERTISING 2500

OWNER'S EQUITY

FIXED ASSETS CAPITAL 502500

EQUIPMENT 65000

BUILDING 450,000

TOTAL ASSETS 712,500 EQUITIES 712500

Following transactions occurred during the month of April

1. Collected from customer Rs. 15000

2. Paid to supplier Rs. 65000
3. Note receivable matured and received Rs.10000
4. 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 30 t h ,2002

Q No.22 The Trial Balance from the given data of Funfood Enterprises on August
31 s t ,2005.

Prepaid insurance 4500

Cash 15600
Office stationary 5600
Sales revenue 1175000
Commission income 25000
Office salaries 56000
Capital- Haroon 575000
Drawing-Haroon 45000
Equipment 45000
A/c payable 56000
Utility expense 12000
Bank overdraft 75000
Insurance expense 5000
Note payable 32000
Building 750000
Prepaid rent 40000
A/c Receivable 60000
Loan from bank 300000
Marketable securities 50000
Interest expense 12000
Operating expenses 1125,300

Prepare:
1. Trial Balance( if not equal, use suspense account)
2. Income Statement
3. Balance Sheet

Q No.23 The balance sheet contains numerous errors. In particular, the bookkeeper knew that the balance
sheet should balance, so he plugged in the owner's equity amount needed to achieve this balance. The owner's
equity amount, however, is not correct. All other amounts are accurate, but some are out of place.

TRÉSORO PUBLISHING CO.

Balance Sheet
Month Ended July 31, 20X3

Assets Liabilities

Cash $12,000 Accounts Receivable $ 3,000

Office Supplies 1,000 Service revenue 68,000

Land 44,000 Property tax expense 800

Salary expense 2,500 Accounts payable 9,000

Office furniture 8,000

Note payable 16,000 Owner's Equity

Rent expense 4,000 Owner's Equity 6,700

$87,500 $87,500
Total assets Total liabilities
Required

1. Prepare the correct balance sheet. Compute total assets, total liabilities, and owner's equity.