Jagannath University Faculty of Business Studies Department of Accounting and Information System BBA Program (First year First

Semester) BBA 1101: Principles of Accounting Academic session: 2011-2012 Theory

1.

Define accounting. Identify and describe the steps in the accounting process. Who are the users of Accounting information? What do you mean by GAAP? Mention the features of GAAP. Accounting is an aid to management-Discuss the statement. Why is accounting called the language of business? Bookkeeping and accounting are the same-Do you agree? Explain. What are the differences between the Bookkeeping and accounting? What are the qualitative characteristics of accounting information. What are basic assumptions of accounting? 10. What is the basic accounting equation? Define assets, liabilities and owners equity. 11. Explain the elements of accounting equation. 12. Explain with examples the effects of transactions on the accounting equation. 13. Define account. Describe the classification of account. 14. What is double entry system? Discuss the advantages of double entry system. 15. What is accounting cycle? Describe the steps in the accounting cycle. 16. Show the differences between Journal and ledger. 17. What is trial balance and what are its purposes? 18. What do you mean by merchandising operations? Describe the operating cycle of a merchandising company. 19. Distinguish between perpetual and periodic inventory system. 20. What do you mean by special journals? What are the advantages of special journals? 21. What are subsidiary ledgers? What are the advantages of using subsidiary ledgers? 22. Explain how transactions recorded in the sales journal and the cash receipts journal are posted. 23. Give some examples of general journal transactions for an organization using special journals. 24. What do you mean by adjusting entries? Why are adjusting entries are necessary? 25. What are the different classes of adjusting entries? Discuss with example. 26. Distinguish between accrual basis accounting and cash basis accounting. 27. Why do accrual basis financial statements provide more useful information than cash basis statements? 28. What do you mean by closing entries? Why are closing entries are necessary? 29. State the entries required to close accounts. 30. What do you mean by reversing entries? Why are reversing entries are necessary? 31. What do you mean by post closing trial balance? 32. What is a work sheet? Explain the purpose of the work sheet. 33. What are the five steps in preparing a work sheet? 34. What is income statement? Show the specimen of a single-step and multi-step income statement with imaginary figures. 35. What is owners equity statement? Show the specimen of owners equity statement with imaginary figures. 36. What is a classified balance sheet? Show the specimen of classified balance sheet with imaginary figures. 37. Distinguish between Capital Expenditure & Revenue Expenditure. 38. Distinguish between Cash basis Accounting & Accrual basis Accounting. 2. 3. 4. 5. 6. 7. 8. 9.

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39. Distinguish between current and non-current liabilities. 40. Explain the concept of business entity and going concern. 41. Depreciation is a process of allocating cost for wear and tear, not a process of valuation Explain. 42. What is Stock Dividend? What is Stock Split? What results involved in stock split? 43. Distinguish between Depreciation, Amortization and Depletion. 44. What are Matching Principles and Revenue Recognition? 45. Discuss the Qualitative Characteristics of Accounting Information. 46. Discuss about Revenue Recognition Principle. 47. What do you mean by the Conceptual Framework of Accounting? 48. Explain the concept of Business Entity and Going Concern. 49. Differentiate between Preferred Stock and Common Stock. 50. Explain Contingent Liabilities.

Mathematical problems

Q. No. 1. Mr. Suzan started his own delivery service, Mr. Suzan deliveries, on June 1, 2010. The following transactions occurred during the month of June. June 1: Mr. Suzan invested $10,000 cash in the business. June 2: Purchased an old van for deliveries for $10,000 for the purpose of deliveries. Mr. Suzan paid $2,000 cash and signed a notes payable for the remaining balance. June 3: Paid $500 for office rent for the month. June 5: Performed $2,400 of service on account. June 9: Withdrew cash $200 from the business for personal use. June 12: Purchased supplies for $150 on account. June 15: Received cash payment of $750 for service provided on June 5 June 17: Purchased gasoline for $100 on account. June 20: Received a cash payment of $1,500 for service provided. June 23: Made a cash payment of $500 on the notes payable. June 26: Paid $250 for utilities. June 27: Hired delivery manager at a salary of $4,000 per month effective on July 1. June 29: Paid for the gasoline purchased on account on June 17. June 30: Paid salary of staff for the month $1,000.

Required: (a) Show the effects of the transactions on the accounting equation using the following format: Assets Equity ==Liabilities + Owners

Date Cash + Accounts Receivable + supplies+ D. Van = Accounts payable+ Notes payable + Capital Include explanation for any exchanges in Mr. Suzan, capital account in your analysis (b) Determine how much owners equity increase or decrease for the month; (c) Prepare an Income Statement for the month ended June (d) Prepare a owners equity statement for June and

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(e) Prepare a Balance Sheet as at June 30, 2010. Q. No. 2. The following selected transactions relate to ABC Company: March-1: Sold on credit Tk.20,000 to Aziz Brothers Terms 2/0, n/30. MarchReceived payment in full from Aziz Brothers for balance due. 11: MarchAccepted Juno Companys Tk.20,000; 6 months 12% note for balance due. 12: MarchMade ABC Company Credit Card sales for Tk.13,200. 13: MarchMade American Express Credit Card sales totaling Tk.6,700. A 5% service 15: fee is charged. MarchAmerican express company made full payment. 30: April-11: Sold Accounts Receivable of Tk.8,000 to XYZ factor. They take a service charge of 2% of the account of receivables sold. April-13: Received collections of Tk.8,200 on ABC Company credit card sales and added finance charges of 1.5% on the remaining balances. May-10: Wrote off as uncollectible Tk.16,000 of Accounts Receivable. ABC uses the percentage of sales as basis to estimate bad debts. June-30: Credit sales for the first six months total Tk.20,00,000. The bad debts percentage is 1% of credit sales. At June 30, the balance in the allowance account is Tk.3,500. July-16: One of the accounts receivable written off in May was from Mr. Salim who pays the amount due Tk.4,000 in full. Required: Prepare the journal entries for the above transactions. Q. No. 3. Medico started his own delivery service, Medico deliveries, on January 1, 2008. The following transactions occurred during the month of January. January 1: Medico invested $90,000 cash in the business. January 2: Purchased an old van for deliveries for $15,000 for the purpose of deliveries. Medico paid $2,000 cash and signed a notes payable for $13,000. January 3: Paid cash $2,000 for office rent for the month of January 2008. January 7: Purchased office supplies for cash $3,000. January 10: Paid electric bill $1,000. January 12: Paid salary of staff for the month $4,000. January 13: Borrowed $27,000 from the bank. January 17: Purchase a delivery van for $10,000 on account. January 21: Earned revenues of $51,000 of which $13,000 is collected in cash and the balances are due. January 24: Withdrew cash $5,000 from the business for personal use. January 27: Paid $3,000 bills for advertisement. January 31: Cash received $2,000 for service of January 21 Required: (f) Show the effects of the transactions on the accounting equation using the following format: Assets Owners Equity ==Liabilities +

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Date

Cash + Accounts Receivable + supplies+ D. Van = Accounts payable+ Notes payable + Capital (g) Determine how much owners equity increase or decrease for the month; (h) Prepare an Income Statement for the month ended June (i) Prepare a owners equity statement for June and (j) Prepare a Balance Sheet as at 31st June 2008.

Q. No. 4. Mr. Raman opens a transportation consulting business called The High Flyers and completes the following transactions in April: April 1 2 3 6 9 12 17 22 25 27 28 30 Required Mr. Raman invested Tk.65,000 cash along with Tk.12,000 of office equipment. Prepaid Tk.8,000 cash for two months rent for an office. (Hint: Debit Prepaid Rent for Tk.8,000) Made credit purchases of office equipment for Tk.28,000 and office supplies for Tk.12,000. Completed a Tk.25,000 project for a client, who will pay within 20 days. Completed services for a client and immediately received Tk.17,000 cash. Paid cash to settle the account payable created on April 3. Paid Tk.12,000 cash for the premium on a 6-month insurance policy. Received payment for the work completed on April 6. Completed work for another client for Tk.7,500 on credit. Mr. Raman withdrew Tk.1,000 cash from the business for personal use. Purchased Tk.7,000 of additional office supplies on credit. Paid Tk.4,000 cash for this months utility bill.

(a)

Prepare general journal entries to record these transactions (use the account titles listed in part 2). (b) Open the following accounts (use the balance column format): Cash (101); Accounts Receivable (104); Office Supplies (125); Prepaid Insurance (126); Prepaid Rent (130); Office Equipment (160); Accounts Payable (200); Mr. Raman, Capital (302); Mr. Raman, Withdrawals (303); Services Revenue (404); and Utilities Expense (790). Post journal entries to the accounts and enter the balance after each posting. (c) Prepare a trial balance as of the end of this months operations. Q. No.5. Mr. Ruthann operates a fashion-consulting business that he began in March 2010. On March 31, 2010, the balance sheet for his business appeared as follows: Mr. Ruthann Balance Sheet March 31, 2010 Assets Current assets: Cash Accounts receivable Office supplies Total assets Liabilities and Owners Equity $10,000 800 200 $11,000

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Current Liabilities: Accounts payable $500 Owners Equity Mr. Ruthann, Capital 10,500 Total Liabilities and Owners $11,000 Equity During April 2010, his business engaged the following transactions: April 5 7 10 17 19 21 27 29 30 30 Required Purchased office supplies in the amount of $300 on account. Paid $700 in office rent for the month of April Hired a receptionist to begin work on April 15. Paid the amount owed on open account on March 31. Performed consulting services for cash in the amount of $900. Collected $600 of amount owed on account. Purchased land for a future store at a cost of $8,000 and signed a notes. Billed customers for service rendered during the month $1,800. Paid receptionist $500 in wages for the last half of April. Mr. Ruthann withdrew Tk.1,000 cash from the business for personal use.

(d) (e)

(f)

Prepare general journal entries to record these transactions (use the account titles listed in part b). Open the following accounts (use the balance column format): Cash (101); Accounts Receivable (111); Office Supplies (135); Land (151); Accounts Payable (201); Notes Payable (252); Mr. Ruthann, Capital (301); Mr. Ruthann, Withdrawals (311); Services Revenue (423); Salaries expenses (705) and Rent Expense (715). Post journal entries to the accounts and enter the balance after each posting. Prepare a trial balance as of the end of this months operations.

Q. No. 4. The ledger balances of Agora Company on September 30, 2005 were as follows: Assets: Cash-Tk. 80,000, Equipment- Tk. 40,000 and Accounts Receivable-Tk.48, 000. Liabilities: Accounts Payable- Tk. 32,000, Note Payable Tk. 40,000; Owners Equity: Capital-Tk. 96,000. Transactions during the month: Oct- 01: Paid 80% of accounts payable amounts Oct- 04: Purchased another furniture of Tk. 35,000 paying 80% amount is cash and issuing a note for the rest balance Oct-20: Cash collected from accounts receivable Tk. 27,000 Oct-22: The owner withdrew Tk. 4,000 from business for his personal use Oct-27: Service provided but unbilled of Tk. 8,000 Oct-31: Salary unpaid Tk. 5,000 Oct-31: Utility bill received for Tk. 2,0 00 Required: Prepare a summary of transaction showing effects in accounting equation. Use column heading and balances as given above. Use Accounts Payable for any expense due as liability. Determine the balances after transaction. Q. No. 5. The ledger balances of Agora Company on September 30, 2005 were as follows: Assets: Cash-Tk. 40,000, Furniture- Tk. 20,000 and Accounts Receivable-Tk.24, 000.

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Liabilities: Accounts Payable- Tk. 16,000, Note Payable Tk. 20,000; Owners Equity: Capital-Tk. 48,000. Transactions during the month: Oct- 01: Paid 70% of accounts payable amounts Oct- 04: Purchased another furniture of Tk. 25,000 paying 80% amount is cash and issuing a note for the rest balance Oct-20: Cash collected from accounts receivable Tk. 17,000 Oct-22: The owner withdrew Tk. 5,000 from business for his personal use Oct-27: Service provided but unbilled of Tk. 8,000 Oct-31: Salary unpaid Tk. 5,000 Oct-31: Utility bill received for Tk. 2,500 Required Prepare a summary of transaction showing effects in accounting equation. Use column heading and balances as given above.. Determine the balances after transaction.

Q. No. 6. Mr. Anderson opens a transportation consulting business called The High Flyers and completes the following transactions in April: April 1 Mr. Anderson invested Tk.75,000 cash along with Tk.20,000 of Machinery. 2 Prepaid Tk.5,000 cash for two months rent for an office. (Hint: Debit Prepaid Rent for Tk.5,000) 3 Made credit purchases of store equipment for Tk.18,000 and store supplies for Tk.15,000. 6 Completed a Tk. 25,000 project for a client, who will pay within 15 days. 9 Completed services for a client and immediately received Tk.27,000 cash. 10 Paid cash to settle the account payable created on April 3. 19 Paid Tk.8,000 cash for the premium on a 6-month insurance policy. 22 Received payment for the work completed on April 6. 25 Completed work for another client for Tk.33,000 on credit. 30 Mr.Anderson withdrew Tk.12,000 cash from the business for personal use. 30 Purchased Tk.14,000 of additional store supplies on credit. 30 Paid Tk.12,000 cash for this months utility bill. Required

(g)

Prepare general journal entries to record these transactions (use the account titles listed in part 2). (h) Open the following T accounts : Cash (103); Accounts Receivable (105); Store Supplies (125); Prepaid Insurance (126); Prepaid Rent (130); Machinery (160); Accounts Payable (200); Mr. Anderson, Capital (301); Mr. Anderson, Withdrawals (303); Services Revenue (400); and Utilities Expense (750). Post journal entries to the accounts and enter the balance after each posting. (i) Prepare a trial balance as of the end of this months operations. Q. No. 7. A Tabular analysis of the transactions made by Mr. Jags for the month of June 2008 shows below: S er ial Cash (Tk.) Machi nery (Tk.) Prepaid Salary (Tk.) Accou nts Receiv Office Suppli es Account s Payable Notes Payable (Tk.) Capital (Tk.) Remarks

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N o 1 2 3 4 5 6 7 8 9 1 0 1 1

able (Tk.) +3,00, 000 -50,000 -20,000 -18,000 -13,000 -10,000 +42,00 0 -16,000 -12,000 -20,000 +28,00 0 +38,0 00 +50, 000 +20,000 +72, 000

(Tk.) =

(Tk.) +3,00,000 Investmen t

+54,000 +13,0 00 +30,0 00

+20,000 80,000 -16,000 -12,000 -20,000 Drawings Salary Service Revenue

28,00 0 Rent Expenses

1 +18,000 -18,000 2 Required: a. Describe each transaction that occurred for the month of June; b. Determine how much owners equity increase or decrease for the month; c. Prepare an Income Statement for the month ended June d. Prepare a owners equity statement for June and e. Prepare a Balance Sheet as at 31st June 2008. Q. No. 8. Mr. Moby started his own delivery service, Moby deliveries, on January 1, 2006. The following transactions occurred during the month of January. January 1: Moby invested $4, 00,000 cash in the business. January 1: Purchased an old van for deliveries for $55,000 for the purpose of deliveries. Moby paid $22,000 cash and signed a notes payable for $33,000. January 3 : Paid cash $20,000 for office rent for the month of January 2006. January 7: Purchased office supplies for cash $25,000. January 10 : Paid electric bill $10,000. January 12: Paid salary of staff for the month $8,000. January 13 : Borrowed $70,000 from the bank. January 17 : Purchase a delivery van for $40,000 on account. January 21: Earned revenues of $80,000 of which $25,000 is collected in cash and the balances are due. January 24: Withdrew cash $15,000 from the business for personal use. January-25: At a monthly payment of Tk. 60,000, a manager was employed who will join in the next month. January 27: Paid $5,000 bills for advertisement. January 31: Cash received $35,000 for service of January 21 Required:

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(i) format:

Show the effects of the transactions on the accounting equation using the following Assets ==Liabilities Owners Equity +

Date (ii) (iii) (iv)

(v)

Cash + Accounts Receivable + supplies+ D. Van = Accounts payable+ Notes payable + Capital Determine how much owners equity increase or decrease for the month. Prepare an Income Statement for the month ended January Prepare a owners equity statement for January and Prepare a Balance Sheet as at 31st January 2006.

Q. No. 9. Pretext opened a law office on July 31, 2006. On July 31, the balance sheet showed Cash $1,90,000; Accounts Receivable $50,000; Land & Building $25,000; Office Equipment $27,000; Accounts Payable$24,000, Notes Payable $40,000.During the August the following transactions occurred: August 1: Purchase computer terminals for $80,000 from digital equipment on account. August 5: Paid $15,000 cash for rent on storage space. August 10: Collected $40,000 of accounts receivable. August 12: Paid $4,000 cash on notes payable. August 15: Earned fees $90,000, of which 20,000 is collected in cash and the balance in due September. August 17: Purchase additional office equipment for $70,000, paying $24,000 in cash and the balance on account. August 21: Paid salary $2,000, rent for August $4,000 and advertising expense $3,000. August 24: Withdraw $2,000 in cash for personal use. August 26: Borrowed $90,000 cash from Standard Chartered Grind lays Bank. August 31: Incurred salary expenses for month on account $4,000 Requirements: i) Record these transactions in the journal book of Pretext. ii) Determine the ledger balance of all related accounts. iii) Prepare trail balance on August 31, 2005 for Pretext. Q. No. 10. A Tabular analysis of the transactions made by Michel for the month of January 2006 below: S. Cash Buildin Prepa Accoun Office Accoun Notes Capital L. (Tk.) g id ts Supplie ts Payabl (Tk.) No (Tk.) salary Receiva s (Tk.) Payabl e (Tk.) (Tk.) ble = e (Tk.) (Tk.) 1 +9,00,0 +9,00,0 00 00 2 -80,000 +80,000 3 -20,000 20,00 0 4 -6,000 +24,000 +18,000 5 -22,000 +22,000 6 -2,000 +6,000 +4,000 7 +52,000 +48,000 1,00,00 0 8 -10,000 -10,000 9 -22,000 -22,000 shows Remarks

Investme nt

Revenue s Drawings

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10 11 12

-20,000 +46,000

-20,000 -46,000 +9,000 -9,000

Salary Rent Exp.

Required: f. Describe each transaction that occurred for the month of January. (10) g. Determine how much owners equity increase or decrease for the month: Q. No. 11.

(2)

Pretext opened a law office on July 31, 2006. On July 31, the balance sheet showed Cash $1, 90,000; Accounts Receivable $50,000; Land & Building $25,000; Office Equipment $27,000; Accounts Payable$24,000, Notes Payable $40,000.During the August the following transactions occurred: August 1: Purchase computer terminals for $70,000 from digital equipment on account. August 5: Paid $5,000 cash for rent on storage space. August 10: Collected $30,000 of accounts receivable. August 12: Paid $2,000 cash on notes payable. August 15: Earned fees $80,000, of which 20,000 is collected in cash and the balance in due September. August 17: Purchase additional office equipment for $80,000, paying $24,000 in cash and the balance on account. August 21: Paid salary $2,500, rent for August $4,000 and advertising expense $3,000. August 24: Withdraw $2,000 in cash for personal use. August 26: Borrow $90,000 cash from Standard Chartered Grind lays Bank. August 31: Incurred salary expenses for month on account $4,000 Required: iv) Record these transactions in the journal book of Pretext. v) Determine the ledger balance of all related accounts. vi) Prepare trial balance as on August 31, 2006 for Pretext. Q. No. 12. Rungs Electric Contracting Company has the following trail balance as of August 31, 2006 Rungs Electric Contracting Company Trial Balance August 31, 2006 Accounts Name Ref Debit Tk. Cash 5,000 Accounts Receivable 3,200 Prepaid Insurance 2,400 Supplies 1,300 Machinery 60,000 Accounts Payable Capital Drawings 1000 Service Revenue Note Payable Advertising Expense 600 Salaries Expense 3,000 Utilities Expense 400 77,300

SL# 1 2 3 4 5 6 7 8 9 10 11 12 13 Total Additional data:

Credit Tk.

2,400 30,000 14,900 30,000

77,300

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1. Insurance expires at the rate of Tk. 200 per month. 2. Supplies of Tk.300 were used during the period. 3. Interest expense of Tk.1, 000 on the notes payable has accrued during the august. 4. Depreciation expense on machinery Tk.500. Required: i) Prepare formal Income Statement for the month ended August 31, 2006. ii) Prepare a Statement of owners equity for the month ended August 31, 2006. iii) Prepare a Balance Sheet for the company as on August 31, 2006. Q. No. 13. The balance of Priyo contained the following accounts at December 31, the end of companys fiscal year. Priyo Trial Balance December 31, 2008 Name of the accounts Unadjusted trial Adjusted trial balance balance Cash Tk. 66,700 Tk. 66,700 Notes Receivable 40,700 45,700 Merchandise Inventory 45,000 46,000 Office Supplies 5,500 3,500 Delivery Equipment 70,000 70,000 Plant and machinery 10,000 10,000 Accumulated Depn-Delivery Equipt Tk.18,000 27,000 Furniture 40,000 50,000 Notes payable 59,000 69,000 Mortgage payable 58,500 58,500 Bonds payable 20,000 20,000 Capital 108,000 108,000 Drawing 12,000 12,000 Sales revenue 759,200 764,200 Sales salaries expenses 4,200 4,200 Cost of goods sold 497,400 496,400 Interest expense 2,300 2,300 Utilities expense 140,000 140,000 Advertisement expense 24,100 24,100 Wages 9,000 10,000 Repair expense 12,100 12,100 Office supply expense 16,700 18,700 Rent expense 24,000 24,000 Sales commission 5,000 5,000 Wages expense payable 2,000 3,000 Depreciation expense-Delivery equipt 9,000 Total 10,24,700 10,24,70 10,49,70 10,49,70 0 0 0 Required: (i) Pass the adjusting journal entries. (ii) Complete the column work sheet by extending the balances to the financial statement columns.

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(iii) (iv)

(v)

Prepare formal Income Statement for the month ended December 31, 2008. Prepare a Statement of owners equity for the month ended December 31, 2008. Prepare a Balance Sheet for the company as on December 31, 2008.

Q. No. 14. Identify how each of the following separate transactions affects financial statements. For the balance sheet, identify how each transaction affects total assets, total liabilities, and equity. For the income statement, identify how each transaction affects net income. For increases, place a + in the column or columns. For decreases, place a - in the column or columns. If both an increase and a decrease occur, place a +/- in the column or columns. Income Balance Sheet Statement Statement Total Assets= Total Liabilities + Oweners Equity Net Income Transactions 1. Owner invests cash 2. Buys supplies for cash 3. Buys supplies on credit 4. Pays rent with cash 5. Performed service on credit 6. Pays cash on payable from (3) 7. Owner withdraw cash 8. Perform service for cash 9.Collects cash on receivable from (5) 10. Ordered supplies Q. No. 15. Stock car enthusiast Cam Wheel left his day job to pursue racing full-time. He completed the following transactions in the month of May. a. Cam Wheel invested $20,000 cash along with an automobile valued at $15,000 in a new sole proprietorship named The Racing Wheel. b. Paid $500 office rent for the month c. Purchased a new $17,000 engine for his race car. He paid $3,000 with the remainder due in 30 days. d. Purchased $4,000 of office supplies on account. e.Service provided for Cash $9,200. f. Service provided for Cash $4,500 and on credit $3,500. g.Advertising expenses on credit $500 h.Paid $400 utilities expenses to pit crew. i.Received full payment on the receivable created in transaction f. j.Withdrew $1,000 to celebrate the victory. k.The payment of accounts payable for cash $800

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Required: Prepare a summary of transaction showing effects in accounting equation. Use column heading and balances as given above. Use Accounts Payable for any expense due as liability. Determine the balances after transaction. Q. No. 16. George Jung opens a transportation consulting business called The High Flyers and completes the following transactions in April: April 1 Jung invested $74,000 cash along with $6,000 of office equipment. 2 Prepaid $3,000 cash for two months rent for an office. (Hint: Debit Prepaid Rent for $3,000) 2 Made credit purchases of office equipment for $8,000 and office supplies for $2,900. 7 Completed a $15,500 project for a client, who will pay within 20 days. 9 Completed services for a client and immediately received $17,000 cash. 10 Paid cash to settle the account payable created on April 2. 19 Paid $12,000 cash for the premium on a 6-month insurance policy. 22 Received payment for the work completed on April 6. 25 Completed work for another client for $7,590 on credit. 30 Jung withdrew $100 cash from the business for personal use. 30 Purchased $6,100 of additional office supplies on credit. 30 Paid $700 cash for this months utility bill. Required

(a) Prepare general journal entries to record these transactions (b) Open the following accounts (use the balance column format):
Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); George Jung, Capital (301); George Jung, Withdrawals (302); Services Revenue (403); and Utilities Expense (690). Post journal entries to the accounts and enter the balance after each posting. (c) Prepare a trial balance as of the end of this months operations. (d) Prepare an Income Statement; (e) Prepare a Statement of owners equity; (f) Prepare a Classified Balance Sheet in an account form. Q. No. 17. (use the account titles listed in part 2).

Dolly Parton opened a law office, Dolly Parton , attorney at Law, on June 1, 2002. On June 30, the balance sheet showed Cash $40,000; Bills Receivable $10,000; Office Supplies $20,000; Office Equipment $25,000; Machinery $15,000; Bills Payable 6,000, and Dolly Parton Capital $1,04,000. During the July the following transactions occurred: a. Purchase additional office equipment for$6,000; paying $1,000 in cash and the balances are on account. b. Paid the office rent for three months in advance on the law office $2,700; c. Purchase additional office supplies on credit $4,000; d. Traded the old machinery and $3,000 in cash for purchases a new machinery. e. Performed $4,000 of service on account; f. Earned revenues of $20,000 of which $9,000 in cash and the balance is due in September.

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g. Paid $1,000 of the amount owed for the office supplies purchased on credit in transaction (c). h. Received $15,000 cash for service provided; i. Collected $5,000 of Bills receivable. j. Paid Utility bills $3,000. k. Withdrew$1,000 from the business to pay personal expenses. l. Paid wages $2,500; office salaries for July $1,000 and Stationery expenses $1,500 Required: a. Record Dolly Parton transactions in an expanded accounting equation .Use the description column to provide a brief explanation of each transaction. b. Journalize the transactions; c. Post to the necessary Ledger Accounts; d. Prepare a Trial Balance for July 31,2002; e. Prepare an Income Statement for July31, 2002; f. Prepare a Statement of owners equity for July 31,2002; g. Prepare a Classified Balance Sheet in an account form at July31, 2002. Q. No. 18. Michelle Pfeiller opened a law office, Michelle Pfeiller, attorney at Law, on July 1, 2003. On July 31, the balance sheet showed Cash $80,000; Accounts Receivable $20,000; Office Supplies $40,000; Office Equipment $50,000; Machinery $30,000; Accounts Payable 12,000, and Michelle Pfeiller Capital $2,08,000. During the August the following transactions occurred: a. Paid salaries, $5,000; office expenses $4,000 and advertisement expenses $3,000 b. Paid the rent for two months in advance on the law office $5,000; c. Purchase additional office equipment for$15,000; paying $12,000 in cash and the balances are on account. d. Purchase additional office supplies on credit $16,000; e. Traded the old machinery and $14,000 in cash for purchases a new machinery. f. Received $20,000 cash for service provided; g. Performed $5,000 of service on account; h. Earned revenues of $20,000 of which $8,000 in cash and the balance is due in September. i. Paid $4,000 of the amount owed for the office supplies purchased on credit in transaction (d). j. Collected $2,000 of accounts receivable. k. Paid Utility bills $6,000. l. Withdrew$5,000 from the business to pay personal expenses. Required: a. Record Michelle Pfeiller transactions in an expanded accounting equation .Use the description column to provide a brief explanation of each transaction. b. Journalize the transactions; c. Post to the necessary T Accounts; d. Prepare a Trial Balance; e. Prepare an Income Statement; f. Prepare a Statement of owners equity; g. Prepare a Classified Balance Sheet in an account form. Q. No. 19. A-1 Answering Service Trial Balance As At December 31, 2010 Balance Sheet Accounts: Debit ($) Cash 1,18,592 Credit ($)

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Accounts Receivable Framing Supplies Unexpired Insurance Land Building Accumulated Depreciation: Building Lodge Accumulated Depreciation: Lodge Notes Payable Accounts Payable Income Tax Payable Unearned Rent Revenue Capital Stock Mortgage payable Retained Earnings Dividends Income Statement Accounts: Answering Service Revenue Advertising Expense Wages Expense Supplies Expense Depreciation Expense: Building Depreciation Expense: Tools and Equipment Utilities Expense Insurance Expense Income Tax Expense Total Additional information: (a) Framing Supplies used in December $600.

6,500 1,800 4,500 52,000 36,000 1,500 12,000 2,000 4,000 2,690 1,560 9,000 80,000 1,00,000 0 14,000 171,250 3,900 56,800 6,900 1,500 2,000 19,400 13,500 22,608 3,72,000

3,72,000

(b) Portion of Insurance Cost Expired in December $1,500. (c) Depreciation on Building for December $150. (d) Depreciation of Lodge for December $200. (e)

Earned one-third of Rent Revenue collected in advance from Harbor Cab.$ 3,000. Unpaid Wages owed to Employees at December 31, $1,950.

(f)

(g) Interest Payable accrued during December $30. (h) Repair Service Revenue earned in December but not yet billed $750. (i) Income Tax Expense for December $4,020 not accounted for. (j) Mortgage interest rate is 10%. Assume that $10,000 of the mortgage payable

will be paid in 2011. Required: (a) Prepare Ten column worksheet as at December 31, 2010. (b) Pass the necessary closing journal entries on December 31, 2010

Page 14 of 35

(c) Prepare the necessary reversing entries on December 31, 2010.

[10+3+2=15] Q. No. 20. As on December 31, 2010 the end of annual accounting period, the trial balance of the ledger of Mahal Store are as follows: MAHAL STORE TRIAL BALANCE DECEMBER 31, 2010 Sl. Name of Accounting Debit Tk. Credit Tk. No. 1 Cash and cash equivalents 1,90,000 2 Accounts Receivable 166,000 3 Merchandise inventory 300,000 4 Purchase 3,310,000 5 Prepaid Insurance 38,000 6 Store Equipment 800,000 7 Accumulated D/P Store Equipment 170,000 8 Accounts Payable 190,000 9 Mahal Capital 10,00,000 10 Mahal drawings 220,000 11 Sales 4,830,000 12 Sales Return & allowances 150,000 13 Sales Discount 72,000 14 Purchase Return & allowances 100,000 15 Purchase Discount 64,000 16 Freight in 122,000 17 Freight out 75,000 18 Advertising expenses 155,000 19 Rent expenses 200,000 20 Salaries expenses 395,000 21 General expenses 165,000 22 Vat current account 4,000 Total 7,258,000 7,258,000 Additional information: (a) Merchandise inventory on hand at December 31, 2010 is Tk. 395,000. (b) Merchandise in transit at December 31, 2010 costing Tk. 5,000, which was shipped by a supplier under the terms F.O.B Shipping point and recorded as purchase but not included in ending Merchandise inventory. (c) Insurance expired during the period is Tk. 20,000. (d) Salaries accrued but not paid Tk. 10,000. (e) Depreciation expenses are changed during the period was Tk. 80,000. (f) General expenses include Tk. 15,000 for utilities, which is to be treated as selling expenses. Required: (i) (ii) (iii) Multiple Income Statement. Owners Equity Statement. Balance Sheet.

Q. No. 21. A-1 Answering Service Trial Balance As At December 31, 2010

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Balance Sheet Accounts: Cash Accounts Receivable Framing Supplies Unexpired Insurance Land Building Accumulated Depreciation: Building Lodge Accumulated Depreciation: Lodge Notes Payable Accounts Payable Income Tax Payable Unearned Rent Revenue Capital Stock Mortgage payable Retained Earnings Dividends Income Statement Accounts: Answering Service Revenue Advertising Expense Wages Expense Supplies Expense Depreciation Expense: Building Depreciation Expense: Tools and Equipment Utilities Expense Insurance Expense Income Tax Expense Total Additional information: (k) Framing Supplies used in December $600.

Debit ($) 1,18,592 6,500 1,800 4,500 52,000 36,000 12,000

Credit ($)

1,500 2,000 4,000 2,690 1,560 9,000 80,000 1,00,000 0 14,000 171,250 3,900 56,800 6,900 1,500 2,000 19,400 13,500 22,608 3,72,000

3,72,000

(l) Portion of Insurance Cost Expired in December $1,500. (m) Depreciation on Building for December $150. (n) Depreciation of Lodge for December $200. (o)

Earned one-third of Rent Revenue collected in advance from Harbor Cab.$ 3,000.

(p) Unpaid Wages owed to Employees at December 31, $1,950. (q) Interest Payable accrued during December $30. (r) Repair Service Revenue earned in December but not yet billed $750. (s) Income Tax Expense for December $4,020 not accounted for. (t) Mortgage interest rate is 10%. Assume that $10,000 of the mortgage payable

will be paid in 2011. Required: (d) Prepare Ten column worksheet as at December 31, 2010. (e) Pass the necessary closing journal entries on December 31, 2010

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(f) Prepare the necessary reversing entries on December 31, 2010 Q. No. 22. OVERNIGHT AUTO SERVICE Trial Balance As At December 31, 2009 Balance Sheet Accounts: Debit ($) Cash 18,592 Accounts Receivable 6,500 Shop Supplies 1,800 Unexpired Insurance 4,500 Land 52,000 Building 36,000 Accumulated Depreciation: Building Tools and Equipment 12,000 Accumulated Depreciation: Tools and Equipment Notes Payable Accounts Payable Income Tax Payable Unearned Rent Revenue Capital Stock Retained Earnings Dividends 14,000 Income Statement Accounts: Repair Service Revenue Advertising Expense 3,900 Wages Expense 56,800 Supplies Expense 6,900 Depreciation Expense: Building 1,500 Depreciation Expense: Tools and Equipment 2,000 Utilities Expense 19,400 Insurance Expense 13,500 Income Tax Expense 22,608 Total 272,000 Additional information: (u) Shop Supplies used in December Tk. 600.
(v) Portion of Insurance Cost Expired in December Tk. 1,500. (w) Depreciation on Building for December Tk. 150. (x) Depreciation of Tools and Equipment for December Tk. 200. (y)

Credit ($)

1,500 2,000 4,000 2,690 1,560 9,000 80,000 0 171,250

272,000

Earned one-third of Rent Revenue collected in advance from Harbor Cab. Tk. 3,000. Unpaid Wages owed to Employees at December 31, Tk. 1,950. Interest Payable accrued during December Tk. 30. Repair Service Revenue earned in December but not yet billed Tk. 750.

(z) (aa) (bb)

(cc) Income Tax Expense for December Tk. 4,020 not accounted for.

Required: (g) Prepare Ten column worksheet as at December 31, 2009.

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(h) Pass the necessary closing journal entries on December 31, 2009 (i) Prepare a post closing Trial Balance on December 31, 2009 (j) Prepare the necessary reversing entries on December 31, 2009. Q. No.23. As on December 31, 2001 the end of annual accounting period, the trial balance of the ledger of Mahmud Store are as follows: MAHMUD STORE TRIAL BALANCE DECEMBER 31, 2001 Sl. Name of Accounting Debit Tk. Credit Tk. No. 1 Cash 90,000 2 Accounts Receivable 166,000 3 Merchandise inventory 300,000 4 Purchase 3,310,000 5 Prepaid Insurance 38,000 6 Store Equipment 800,000 7 Accumulated D/P Store Equipment 170,000 8 Accounts Payable 190,000 9 Mahmud Capital 900,000 10 Mahmud drawings 220,000 11 Sales 4,830,000 12 Sales Return & allowances 150,000 13 Sales Discount 72,000 14 Purchase Return & allowances 100,000 15 Purchase Discount 64,000 16 Freight in 122,000 17 Freight out 75,000 18 Advertising expenses 155,000 19 Rent expenses 200,000 20 Salaries expenses 395,000 21 General expenses 165,000 22 Vat current account 4,000 Total 6,258,000 6,258,000 Additional information: (a) Merchandise inventory on hand at December 31, 2001 is Tk. 395,000. (b) Merchandise in transit at December 31, 2001 costing Tk. 5,000, which was shipped by a supplier under the terms F.O.B Shipping point and recorded as purchase but not included in ending Merchandise inventory. (c) Insurance expired during the period is Tk. 20,000. (d) Salaries accrued but not paid Tk. 10,000. (e) Depreciation expenses are changed during the period was Tk. 80,000. (f) General expenses include Tk. 15,000 for utilities, which is to be treated as selling expenses. Required: (i) Multiple Income Statement. (ii) Owners Equity Statement. (iii) Balance Sheet. Q. No. 24. Here are some accounts balances of Pretext Company on December 31, 2008: Name of Accounts Debit (Tk.) Credit

Page 18 of 35

(Tk.) Prepaid insurance expense 18,000 Supplies on hand 6,000 Unearned service revenue 9,000 Note payable 3,000 Salaries 13,200 Rent expenses 6,000 Owners Equity 31,200 Service revenue 21,000 Accounts payable 9,000 Accounts Receivable 12,000 Plant & machinery 18,000 Total 73,200 73,200 On December 31, 2008 following matters were revealed: i) Actual balance of supplies on hand became Tk. 2,000. ii) Depreciation on plant& machinery@ 10% p.a. iii) Salaries were unpaid for the month of December Tk. 1,000. iv) Insurance is expired Tk.2,000. v) Tk.400 is treated to be doubtful debts and it is also decided to create 5% allowance for doubtful debts. vi) Two-third of unearned revenue is earned during the period. vii) Service provided to a customer but unbilled Tk.2,000. viii) Rent is accrued but not paid Tk.3,000. ix) A utility bill of Tk.300 is not received during the period. x) The interest rate on the notes payable is 10% p.a. Notes payable was issued as on 1st July 2008. Required: (a) Pass the necessary adjusting journals in the book of Pretext Company. (b) Prepare the adjusted Trial Balance Q. No. 25. The balance of Pearson contained the following accounts at December 31, the end of companys fiscal year. Pearson Trial Balance December 31, 2008 Name of the accounts Unadjusted trial Adjusted trial balance balance Cash Tk. 50,700 Tk. 50,700 Accounts Receivable 46,700 51,700 Merchandise Inventory 45,000 46,000 Store Supplies 5,500 3,500 Store Equipment 80,000 80,000 Accumulated Depn-Store Equipt Tk.18,000 27,000 Furniture 40,000 50,000 Notes payable 49,000 59,000 Accounts payable 58,500 58,500 Bank Loan 20,000 20,000 Capital 108,000 108,000 Drawing 12,000 12,000 Sales 759,200 764,200 Sales return and allowance 4,200 4,200

Page 19 of 35

Cost of goods sold Interest expense Salary expense Advertisement expense Utilities expense Repair expense Store supply expense Rent expense Sales commission Utilities expense payable Depreciation expense-store equipt Total

497,400 2,300 140,000 24,100 9,000 12,100 16,700 24,000 5,000 2,000 1,014,700 1,014,70 0

496,400 2,300 140,000 24,100 10,000 12,100 18,700 24,000 5,000 3,000 9,000 1,039,70 0 1,039,70 0

Required: Complete the column work sheet by extending the balances to the financial statement columns. Q. No. 26. Here are some accounts balances of Western Company on December 31, 2004: Name of Accounts Debit (Tk.) Credit (Tk.) Prepaid insurance expense 12,000 Supplies on hand 4,000 Unearned service revenue 6,000 Note payable 2,000 Salaries 8,800 Rent expenses 4,000 Owners Equity 20,800 Service revenue 14,000 Accounts payable 6,000 Accounts Receivable 8,000 Plant Assets 12,000 Total 48,800 48,800 On December 31, 2004 following matters were revealed: xi) Actual balance of supplies on hand became Tk. 2,300. xii) Depreciation on plant assets is 20% p.a. xiii) Salaries was unpaid for the month of December Tk.600. xiv) Insurance is expired Tk.1, 500. xv) Tk.300 is treated to be doubtful debts and it is also decided to create 5% allowance for doubtful debts. xvi) One-third of unearned revenue is earned during the period. xvii) Service provided to a customer but unbilled Tk.2,000. xviii) Rent is accrued but not paid Tk.3,000. xix) A utility bill of Tk.400 is not received during the period. xx) The interest rate on the notes payable is 10% p.a. Notes payable was issued as on 1st July 2004. Required: Pass the necessary adjusting journals in the book of Western Company. Q. No. 27. XYZ Electric Contracting Company has the following trail balance as of August 31, 2007 XYZ Electric Contracting Company Trial Balance

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August 31, 2007 SL# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Accounts Name Cash Accounts Receivable Prepaid Insurance Supplies Equipment Accounts Payable Capital Drawings Service Revenue Note Payable Advertising Expense Salaries Expense Utilities Expense Rent expenses Total Ref Debit Tk. 5,000 3,200 2,400 1,300 60,000 2,400 20,000 1000 14,900 40,000 800 1,200 400 2,000 77,300 Credit Tk.

77,300

Additional data: (a) Insurance expires at the rate of Tk. 200 per month. (b) Supplies of Tk 800 were used during the period. (c) Interest expense of Tk. 700 on the notes payable has accrued during the august. (d) Depreciation expense on equipment Tk. 1,000. (e) Salaries accrued but not paid Tk. 500. Required: Complete the 10 column work sheet. Q. No. 28. Here are some accounts balances of Pretext Company on December 31, 2008: Name of Accounts Debit (Tk.) Credit (Tk.) Prepaid insurance expense 18,000 Supplies on hand 6,000 Unearned service revenue 9,000 Note payable 3,000 Salaries 13,200 Rent expenses 6,000 Owners Equity 31,200 Service revenue 21,000 Accounts payable 9,000 Accounts Receivable 12,000 Plant & machinery 18,000 Total 73,200 73,200 On December 31, 2008 following matters were revealed: xxi) Actual balance of supplies on hand became Tk. 2,000. xxii) Depreciation on plant& machinery@ 10% p.a. xxiii) Salaries were unpaid for the month of December Tk. 1,000. xxiv) Insurance is expired Tk.2,000. xxv) Tk.400 is treated to be doubtful debts and it is also decided to create 5% allowance for doubtful debts. xxvi) Two-third of unearned revenue is earned during the period.

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Required:

xxvii) Service provided to a customer but unbilled Tk.2,000. xxviii) Rent is accrued but not paid Tk.3,000. xxix) A utility bill of Tk.300 is not received during the period. xxx) The interest rate on the notes payable is 10% p.a. Notes payable was issued as on 1st July 2008. (c) Pass the necessary adjusting journals in the book of Pretext Company. (d) Prepare the adjusted Trial Balance

Q. No. 29. As on December 31, 2001 the end of annual accounting period, the trial balance of the ledger of Mahmud Store are as follows: MAHMUD STORE TRIAL BALANCE DECEMBER 31, 2001 Sl. Name of Accounting Debit Tk. Credit Tk. No. 1 Cash 90,000 2 Accounts Receivable 166,000 3 Merchandise inventory 300,000 4 Purchase 3,310,000 5 Prepaid Insurance 38,000 6 Store Equipment 800,000 7 Accumulated D/P Store Equipment 170,000 8 Accounts Payable 190,000 9 Mahmud Capital 900,000 10 Mahmud drawings 220,000 11 Sales 4,830,000 12 Sales Return & allowances 150,000 13 Sales Discount 72,000 14 Purchase Return & allowances 100,000 15 Purchase Discount 64,000 16 Freight in 122,000 17 Freight out 75,000 18 Advertising expenses 155,000 19 Rent expenses 200,000 20 Salaries expenses 395,000 21 General expenses 165,000 22 Vat current account 4,000 Total 6,258,000 6,258,000 Additional information: (a) Merchandise inventory on hand at December 31, 2001 is Tk. 395,000. (b) Insurance expired during the period is Tk. 20,000. (d) Salaries accrued but not paid Tk. 10,000. (e) Depreciation expenses are changed during the period was Tk. 80,000. (f) General expenses include Tk. 15,000 for utilities, which is to be treated as selling expenses. Required: (i) Multiple Income Statement. (ii) Owners Equity Statement. (iii) Balance Sheet.

Page 22 of 35

Q. No. 30. The balance of Vision Corporation contained the following accounts at June 30, the end of companys fiscal year. Vision Corporation Trial Balance June 30, 2010 Name of the accounts Unadjusted trial Adjusted trial balance balance Cash and cash equivalents $ 1,10,000 $ 1,10,000 Interest receivable 4,500 4,500 Trade Receivable 20,000 20,000 Accounts receivable 3,600 3,600 Prepaid insurance 3,100 1,400 Delivery Equipment 40,000 40,000 Goodwill 10,000 10,000 Roofing supplies 4,000 4,000 Copy right 2,000 2,000 Building 49,000 49,000 Store Equipment 60,000 60,000 Franchise 10,000 10,000 Plant and machinery 1,36,000 1,36,000 Accounts payable 10,400 10,400 Unearned revenue 5,000 2,800 Mortgage payable 2,80,000 2,80,000 Bonds payable due in 4 years 20,000 20,000 Capital 1,20,000 1,20,000 Drawing 20,000 20,000 Service revenues 75,600 75,600 Rent revenue 22,000 24,200 Interest revenue 2,000 2,000 Warranty expenses 4,000 4,000 Salary expense 15,000 15,000 Advertisement expense 10,000 10,000 Salesman commission 5,000 5,000 Doubtful expenses 10,000 10,000 Patent amortization 2,000 2,000 Miscellaneous expenses 1,000 1,000 Travel expenses 800 800 Utilities expense 15,000 15,000 Total 5,35,000 5,35,000 Insurance expense 1,700 Depreciation expenses-Building 2,500 Accumulated depreciation on building 2,500 Depreciation expenses-Equipment 3,900 Accumulated depreciation on 3,900 Equipment Interest expense 8,000 Interest payable 8,000 Property tax expenses 1,000 Property tax payable 1,000 Total 5,50,400 5,50,400 Required:

Page 23 of 35

(i)

(ii) (iii)
(iv)

(v)

Complete the Informal Statements by extending the balances to the financial statement columns. Prepare a formal Statement of Financial Performance for the month ended June 30, 2010. Prepare an owners equity statement for the month ended June 30, 2010. Determine how much owners equity increase or decrease. Prepare a Statement of Classified Financial Position as at the month ended June 30, 2010. ($80,000 of mortgage payable is due for payment next year.)

Q. No. 31. The balance of Bishop Fashion Center contained the following accounts at December 31, the end of companys fiscal year. Bishop Fashion Center Trail Balance December 31, 2005 Name of the accounts Debit (Tk.) Credit (Tk.) Cash 25,700 Accounts Receivable 34,700 Merchandise Inventory 45,000 Store Supplies 5,500 Store Equipment 85,000 Accumulated Depn-Store Equipt 18,000 Delivery Equipment 48,000 Accumulated Depreciation - Delivery 6,000 Equipment Notes payable 51,000 Accounts payable 48,500 Common stock 90,000 Retained earnings 8,000 Sales 7,57,200 Sales return and allowance 4,200 Cost of goods sold 4,97,400 Salaries expense 1,40,000 Advertisement expense 26,400 Utilities expense 14,000 Repair expense 12,100 Delivery expense 16,700 Rent expense 24,000 Total 9,78,700 9,78,700 Adjustment data: a) Store supplies on hand totaled Tk.3,500 b) Depreciation is Tk.9,000 on the store equipment and Tk.7,000 on the delivery equipment. c) Interest of Tk.11,000 is accrued on notes payable Other data: a) Salary expense is 70% selling and the rest for administrative. b) Rent and utilities expense are 80% selling and 20% administrative. c) Tk.30,000 of notes payable are due for the payment next year. d) Repair expense is 100% administrative Required: i) Enter the trial balance on a work sheet and complete the work sheet.

Page 24 of 35

ii) iii)
Q. No. 32.

Journalizing the closing entries. Prepare a post closing trial balance.

The accountant of Whitney Company has compiled the following information for the companys records as a basis for an income statement for the year ended December 31, 2005. Rental Revenues Tk.29,000 Interest on notes payable 18,000 Market appreciation on land above cost 31,000 Wages and salaries sales 1,14,800 Materials and supplies-sales 17,600 Income tax 37,400 Wages and salaries administrative 1,35,900 Other administrative expenses 51,700 Cost of goods sold 4,96,000 Net sales 9,80,000 Depreciation on plant assets (70% selling, 30% 65,000 administrative) Dividend declared 16,000 There were 20,000 shares of common stock outstanding during the year. Required: (a) Prepare a Multi-step income statement. (b) Prepare a single- step income statement. (c) Which format do you prefer? Discuss. Q. No. 33. Presented below is selected information pertaining to the Huston Company during 2005: Cash balance, January 1, 2005 Tk.13,000 Accounts Receivable, January 1, 2005 19,000 Collections from customers in 2005 2,10,000 Capital Account balance, January 1, 2005 38,000 Total assets, January 1, 2005 75,000 Cash investment added July 1, 2005 5,000 Total assets, December 31, 2005 1,01,000 Cash balance, December 31, 2005 20,000 Accounts Receivable, December 31, 2005 36,000 Merchandise taken for personal use 11,000 Total liabilities, December 31, 2005 41,000 Q. No. 34. Required: Compute the net income for 2005.

Presented below is information related to American Horse Company for 2005 Account Titles Amount ($) Retained Earning balance, January 1, 2005 9,80,000 Sales for the year 2,50,00,000 Cost of goods sold 1,70,00,000 Interest revenue 70,000 Selling & Administrative expenses 47,00,000 Write off goodwill (not tax deductible) 5,20,00 Income tax for 2005 9,05,000 Assessment for additional 2002 income tax 3,00,000

Page 25 of 35

Gain on sale of investment 1,10,000 Loss due to flood damage-extraordinary item 3,90,000 Loss on the disposition of the whole sale division 4,40,000 Loss on the operation of the whole sale division 90,000 Dividend declared on common stock 2,50,000 Dividend declared on preferred stock 70,000 Required Prepare a multi-step income statement and a retained earning statement. American Horse Company decided to discontinue its wholesale operations and to retain its manufacturing operations. On September 15, American Horse Company sold the whole sale operations to Rogers Company. During 2005, there were 30,000 shares of common stock outstanding all year. Q. No. 35. Assume that Denis Savored Company has the following accounts at the end of the current year. (1) Allowance for doubtful Accounts- Accounts receivable- Should be deducted from accounts receivable (2) Merchandise held on consignment- Should not appear on the consignee balance sheet except possibly as a note to the financial statement. (3) Advances received on sales contract- are normally a current liability and should be shown as such in the balance sheet. (4) Merchandise out on consignment- Should be shown among current assets under the heading of inventories. (5) Pension fund on deposit with a trustee: should be shown among noncurrent assets under the separate heading or grouped with similar fund and deposits in investment section. (6) Franchises: should be itemized in a section for intangible assets. (7) Materials in transit- purchased f.o.b. destination: Should not be shown on the balance sheet of the buyer, if the purchased f.o.b. destination. (8) Held to maturity securities: Long term investment (9) Land held for investment: Long term investment (10) Land held for future plant sit: Long term investment (11) Bond sinking fund: Long term investment (12) Investment in bonds: Current assets (13) Investment in stocks: Current assets (14) Advances to Employees: Current assets (15) Cash and cash equivalents- Current assets (16) Advances to suppliers- Current assets (17) Accrued revenues- Current assets (18) Restricted securities-Fiberboard (Current portion)- Current assets (19) Trade receivables- Current assets (20) Accounts receivables- Current assets (21) Notes receivables- Current assets (22) Affiliated companies Installment notes and contracts- Current assets (23) Trade receivables-net- Current assets (24) Inventories (Merchandise)- Current assets (25) Inventories (Finished goods, work in process, raw materials)- Current assets (26) Short-term investment: Current assets (27) Investment securities available for sale- Current assets (28) Investment securities held to maturity (at fair value)- Current assets (29) Mortgage-related securities held to maturity (at fair value)- Current assets

Page 26 of 35

(30) (31) (32) (33) (34) (35) (36) (37) (38) (39) (40) (41) (42) (43) (44) (45) (46) (47) (48) (49) (50) (51) (52) (53) (54) (55) (56) (57) (58) (59) (60) (61) (62) (63) (64) (65) (66) (67) (68) (69) (70) (71) (72) (73) (74) (75) (76) (77) (78) (79) (80) (81) (82) (83) (84)

Mortgage-related securities available for sale- Current assets Trading securities- Current assets Marketable securities- Current assets Prepaid or unexpired insurance and rent- Current assets Prepaid pension benefits- Current assets Marketable securities- Current assets Trading asset- Current assets Product and other insurance receivables- Current assets Accrued interest on notes receivable- Current assets Machinery retired from use and held for sale- Current assets Refundable federal and state income taxes- Current assets Notes receivable- Short term- Current assets Interest receivable- Current assets Franchise: Intangible assets Patent: Intangible assets Copy right: Intangible assets Organization cost: Intangible assets Goodwill: Intangible assets Lease hold: Intangible assets Preliminary Expenses: Intangible assets Technology know-how: Intangible assets Design and Membership: Intangible assets Non compete covenants- Intangible assets Leasehold improvements: Intangible assets Licenses: Intangible assets Bond Sinking fund: Long term investment Trading securities at fair value: Current assets Inventories at lower of cost: Current assets Accounts receivable is pledged as collateral on bank loan: Current assets Interest receivable: Current assets Refundable income tax: Current assets Petty cash: Current assets Unrealized holding gain (loss)- Stockholder equity Paid- in on capital stock- Preferred stock- Stockholders equity Paid- in on capital stock- Common stock- Stockholders equity Profit reserve: Stockholders equity Reserve fund: Stockholders equity Revolution reserve: Stockholders equity Estimated vacation pay liabilities: Current liabilities Additional paid- in capital- Stockholders equity Premium on common stock- Stockholders equity Earnings retained in the business- Stockholders equity Subscription receivable on common stock: Current assets Subscription receivable on preferred stock: Current assets Short term investment fair value adjustment: Current assets Cash restricted for plant expansion: Long term investment Premium on common stock- Stockholder equity. Cash surrender value of life insurance: Long term investment Assets allocated to trustee for expansion: Long term investment Long term investment fair value adjustment: Long term investments Stock owned in affiliated companies: Long term investments Long term receivable: Long term investment Capital Lease: Property, plant and Equipment Cost of uncompleted plant facilities: Property, plant and Equipment Display cases and equipment: Property, plant and Equipment

Page 27 of 35

(85) (86) (87) (88) (89) (90) (91) (92) (93) (94) (95) (96) (97) (98) (99) (100) (101) (102) (103) (104) (105) (106) (107) (108) (109) (110) (111) (112) (113) (114) (115) (116) (117) (118) (119) (120) (121) (122) (123) (124) (125) (126) (127) (128) (129) (130) (131) (132) (133) (134) (135) (136) (137)

Boats: Property, plant and Equipment Professional library: Property, plant and Equipment Land improvements: Property, plant and Equipment Mineral deposits: natural resources Warehouse in process of Construction: Property, plant and Equipment Tools, dies and molds: Property, plant and Equipment Fully depreciated machine still in use: Property, plant and Equipment Advance from customers: Current liabilities Bank overdraft: Current liabilities Unearned subscription: Current liabilities Bank loans payable secured by investment: Current liabilities Installment loan unpaid balance: Current liabilities Trade accounts payable (within 1 year)- Current liabilities Notes payable (within 1 year)- Current liabilities Sales taxes payable- Current liabilities Deferred credits: current liabilities Minority interest: current liabilities Customer advances- Current liabilities Revenue received in advance- Current liabilities Accrued special charges- Current liabilities Unclaimed payroll taxes- Current liabilities Unearned admission revenues- Current liabilities Advances received on sales contract- Current liabilities Accrued or outstanding expenses (wages, salary)- Current liabilities Accrued vacation pay- Current liabilities Short-term borrowings- Current liabilities Cash dividends payable- Current liabilities Accrued interest on notes payable- Current liabilities Insurance payable- Current liabilities Returnable cash deposits- Current liabilities Income tax payable- Current liabilities Accrued pension liabilities- Current liabilities Estimated warranty liability- Current liabilities Current portion or maturities of long-term debt -Current liabilities Unearned subscription revenue or dues revenue- Current liabilities Bond interest payable- Current liabilities Property tax payable- Current liabilities Accrued employee compensation and benefits: Current liabilities FICA taxes payable- Current liabilities Employees Federal income tax payable- Current liabilities Employees Medical insurance payable- Current liabilities Employees Union dues payable- Current liabilities Employees Retirement program payable- Current liabilities Employees Bonuses- Current liabilities Salaries that company budget shows will be paid to employees within the next year: Long term liabilities. Legal fees payable: Current liabilities Unearned consultant fees: Current liabilities Unearned legal fees: Current liabilities Current maturities of long-term debt- Current liabilities Current obligations under capital leases- Current liabilities Payroll taxes payable- Current liabilities Other accrued liabilities- Current liabilities Unearned janitorial revenues: Current liabilities

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(138) (139) (140) (141) (142) (143) (144) (145) (146) (147) (148) (149) (150) Q. No. 36.

Mortgage notes payable to the bank- Long term liabilities- Current liabilities Bonds payable- Long term liabilities- Current liabilities Lease liabilities 20 years, 12% Debenture, due January1, 2008- Long term liabilities- Current liabilities Deferred income taxes- Long term liabilities Premium on bonds payable: Long term liabilities Post retirement and post employment benefits other than pensions: Long term liabilities Put warrants- Long term liabilities Pension obligations: Long term liabilities Unsecured notes payable: Long term liabilities Long term rental obligations: Long term liabilities Obligations under capital lease: Long term investment Receivable officers-Current Assets Preferred stock investments: Long term investment

Assume that Denis Savard Company has the following accounts at the end of the current year. (1) Common stock; (2) Discount on bonds payable; (3) Treasury stock (at cost) (4) Common stock subscribed (5) Raw materials (6) Preferred stock Investment Long term (7) Unearned rent (8) Work in Process (9) Copyrights (10) Building (11) Notes Receivable (12) Cash (13) Accrued salaries payable (14) Accumulated depreciation-Building (15) Cash restricted for Plant Expansion (16) Land held for plant site (17) Allowance for doubtful Accounts- Accounts receivable; (18) Retained Earnings Un-appropriated; (19) Premium on common stock (20) Unearned subscriptions (21) Receivable- officers (due in one year) (22) Finished goods (23) Accounts Receivable (24) Bonds Payable (due in 4 years) (25) Stock subscriptions Receivable Required: Prepare a classified balance sheet in good form (no monetary amounts are necessary) Q. No. 37. Presented below is the Trial Balance of William Melvin Kelly Corporation at December 31, 2006. Name of the Accounts Debit Credit amount Amount Cash Tk.1,97,000

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Sales Tk.81,00,000 Trading Securities (at cost Tk.1,45,000) 1,53,000 Cost of goods sold 48,00,000 Long- term investments in bonds 2,99,000 Long- term investments in stocks 2,77,000 Short term Notes Payable 90,000 Accounts Payable 4,55,000 Selling expenses 20,00,000 Investment revenues 63,000 Land 2,60,000 Building 10,40,000 Dividend Payable 1,36,000 Accrued liabilities 96,000 Accounts receivable 4,35,000 Accumulated Depreciation Building 1,52,000 Allowance for doubtful accounts 25,000 Administrative expenses 9,00,000 Interest expenses 2,11,000 Inventories 5,97,000 Extraordinary gain 80,000 Prior period adjustment- Depreciation Error 1,40,000 Long term notes payable 9,00,000 Equipment 6,00,000 Bonds payable 10,00,000 Accumulated depreciation building 60,000 Franchise (net of Tk.80,000 amount) 1,60,000 Common stock (Tk.5 par) 10,00,000 Treasury stock 1,91,000 Patent(net of Tk.30,000 amount) 1,95,000 Retained earnings 2,18,000 Additional paid in capital 80,000 Total 1,24,55,000 1,24,55,000 Required: Prepare a Balance sheet at December 31, 2006 William Melvin Kelly Corporation. Ignore income taxes. Q. No. 38. The balance of Pearl Fashion Center contained the following accounts at December 31, the end of companys fiscal year. Pearl Fashion Center Trial Balance December 31, 2008 Name of the accounts Cash Prepaid rent Notes Receivable Accounts Receivable Merchandise Inventory Office Supplies Store Equipment Accumulated Depn-Store Equipt Debit (Tk.) 12,000 4,000 10,700 33,000 45,700 5,500 85,000 Credit (Tk.)

18,000

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Delivery Equipment 48,000 Accumulated Depreciation - Delivery 6,000 Equipment Notes payable 50,000 Interest payable 1,000 Accounts payable 48,500 Common stock 97,000 Retained earnings (01.01.2008) 8,000 Sales 7,50,200 Sales return and allowance 4,200 Cost of goods sold 4,97,400 Salaries expense 1,40,000 Advertisement expense 24,000 Dividend paid 2,000 Utilities expense 14,000 Repair expense 12,500 Delivery expense 16,000 Rent expense 24,700 Total 9,78,700 9,78,700 Adjustment data: d) Office supplies on hand totaled Tk.2,500 e) Depreciation is Tk.8,000 on the store equipment and Tk.5,000 on the delivery equipment. f) Interest of Tk.5,000 is accrued on notes payable g) Salaries accrued but not paid Tk.2,000 Required: iv) Enter the trial balance on a work sheet and complete the work sheet. v) Journalizing the closing entries. vi) Prepare a post closing trial balance. Q. No. 39. (a) Deposits received from customers (b) Paid in capital (c) Additional paid in capital (d) Trading assets (e) Short term debt (f) Long-term debt (g) Merchandise held on consignment: (h) Advances received on sales contract (i) Merchandise out on consignment (j) Pension fund on deposit with a trustee (k) Franchises (l) Materials in transit- purchased f.o.b. destination: (m)Common share (n) Discount on bonds payable (o) Treasury stock (at cost) (p) Common stock subscribed (q) Preferred stock Investment (r) Unearned rent revenue (s) Copyrights (t) Discount on Notes Receivable (u) Accrued salaries payable (v) Accumulated depreciation-Building (w) Cash restricted for Plant Expansion (x) Land held for plant site:

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(ww) within the next year,

(y) Allowance for bad debts Accounts (z) Premium on common stock (aa) Unearned subscriptions Revenue: (bb) Receivable- officers (due in one year) : (cc) Bonds Payable (due in 4 years) (dd) Petty cash: (ee) Warehouse in process of construction (ff) Accrued interest on notes payable (gg) Deficit (hh) Income tax payable: (ii) Accrued Vocation pay (jj) Non-current liabilities (kk) Premium on bonds payable (ll) Allowance for doubtful accounts receivable: (mm) Cash surrender value of life insurance (nn) Bond sinking fund(oo) Merchandise inventory ending (pp) Taxes payable (qq) Advances to suppliers (rr) Sales tax payable: (ss)Accrued interest on notes receivable: (tt) Machinery retired from use and held for sale (uu) Fully depreciated machine still in use (vv) Organization costs Salaries that company budget shows will be paid to employees (xx) Discount on bond payable (yy) Paid in capital in excess of par. (zz)Stock subscriptions Receivable (aaa) Accrued revenues (bbb) Accrued expenses (ccc) Property tax expenses (ddd) Sales salaries expenses (eee) Interest receivable (fff) Property tax payable (ggg) Telephone and internet expenses (hhh) Art supplies (iii) Loss on inventory write down; (jjj) Common stock (kkk) Interest payable (lll) Accounts payable (mmm) Bonds payable (nnn) Retained earnings beginnings (ooo) Loss on inventory write down; (ppp)Loss from strike (qqq)Beginning inventory (rrr) Transportation in (sss) Packing expenses (ttt) Loss on sale of investment (uuu)Loss from earthquake (vvv) Cash dividend (www) Stock dividend (xxx) Interest revenue (yyy) Amortization of intangible assets (zzz) Depletion of natural resources (aaaa) Trade accounts payable

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(bbbb) Current portion of long term debt (cccc) Pension obligation (dddd) Inventories at lower of average cost or market (eeee) Notes payable to banks (ffff) Deposits received from customers (gggg) Current maturities to long term debt (hhhh) Other current liabilities (iiii) Accrued employee compensation and benefits Required: Prepare a classified balance sheet in good form (no monetary amounts are necessary) Q. No. 40. The balance of Quality Goods Center contained the following accounts at December 31, the end of companys fiscal year. Quality Goods Center Trail Balance December 31, 2005 Name of the accounts Unadjusted trial balance Adjusted trial balance Cash Tk. 51,700 Tk. 51,700 Accounts Receivable 40,700 45,700 Merchandise Inventory 45,000 46,000 Store Supplies 5,500 3,500 Store Equipment 85,000 85,000 Accumulated Depn-Store Equipt Tk.18,000 27,000 Furniture 40,000 50,000 Notes payable 49,000 59,000 Accounts payable 58,500 58,500 Bank Loan 20,000 20,000 Capital 108,000 108,000 Drawing 12,000 12,000 Sales 759,200 764,200 Sales return and allowance 4,200 4,200 Cost of goods sold 497,400 496,400 Interest expense 2,300 2,300 Salary expense 140,000 140,000 Advertisement expense 24,100 24,100 Utilities expense 9,000 10,000 Repair expense 12,100 12,100 Store supply expense 16,700 18,700 Rent expense 24,000 24,000 Sales commission 5,000 5,000 Utilities expense payable 2,000 3,000 Depreciation expense-store equipt 9,000 Total 1,014,700 1,014,700 1,039,700 1,039,700 Additional Information: 1. Bank loan is due in the year of 2007 2. Only 20,000 of note payable is due in next fiscal year 3. Salary expense is 80% selling and the rest for administration 4. Rent and utilities expense are 70% selling and 30% administrative 5. Full repair expense has been incurred for the furniture which is solely used in head office

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Required: (a) Prepare multi-step income statement for the year ended on December 31, 2005. (b) Prepare a statement of owners equity statement for the year ended December 31, 2005. (c) Prepare classified balance sheet on December 31, 2005. Q. No. 41. Eva Tsai opened Ivans Window Washing on July 1, 2008. During July the following transactions were completed: Date July 1 2 3 5 12 18 Transactions Tsai invested $1, 50,000 cash and $2, 00,000 machinery in the business. Purchased used machinery for $35,000; paying $5,000 in cash and the balances are on account. Purchased cleaning supplies for $5,000 on account. Paid $9,000 cash on one year insurance policy effective on July 1. Billed customers $20,000 for cleaning supplies. Paid $8,000 cash on amount owed on machinery and $3,000 on amount owed on cleaning

supplies. 20 Paid $6,000 cash for employees salaries. 21 Collected $ 14,000 cash from customers billed on July 12. 25 Billed customers $28,000 for cleaning supplies. 29 Paid Gas and Oil for the month on truck $10,000. 31 Withdrew $6,000 cash for personal use. Required:

i) ii) iii) iv) v)

Prepare a summary of transaction showing effects in accounting equation. Record these transactions in the journal book of Eva Tsai. Determine the ledger balance of all related accounts. Prepare trial balance at July 31, on a work sheet. Enter the following adjustments on the work sheet and complete the work sheet. (i) Service provided but unbilled and uncollected at July were $7,000. (ii) Depreciation on machinery for the month $1500. (iii) One-twelfth of the insurance expired. (iv) An inventory count shows $2,000 of cleaning supplies on hand at July 31. (v) Accrued but unpaid employees salaries were $3,000.

vi)
2008.

Prepare a formal Statement of Financial performance for the month ended July 31, Prepare an owners equity statement for the month ended July 31, 2008. Determine how much owners equity increase or decrease. Prepare a statement of Financial Position as at the month ended July 31, 2008. Prepare the necessary adjustment journals on July 31, 2008. Prepare the necessary closing journal on July 31, 2008.

vii) viii) ix) x) xi)

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xii) xiii)

Prepare the Post closing Trial Balance on July 31, 2008. Prepare the reversing journal entries on July 31, 2008.

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