C#503 PROBLEMS AS PER LECTURES LEC#07 PROBLEM about Adjusting Entries Question: ABC Ltd. is a provider of taxation services.

The following unadjusted trial balance has been taken from the books of accounts the company. ABC Ltd. Trial Balance January 31, 2010 Account Title Cash Accounts Receivable Pre-paid Insurance Supplies Equipment Notes payable (12%) Accounts Payable Capital Drawings Consulting Fees Salary Expense Utilities Expense Advertising Expense Total Debit (Tk.) 5,400 2,800 2,400 1,300 60,000 Credit (Tk.)

30,000 2,400 30,000 1,000 14,900 3,200 800 400 77,300

77,300

Adjustments: a) Insurance expires at the rate of Tk.150 per month b) Supplies on hand at the end of the month Tk.300 c) Monthly depreciation on equipment is Tk.1,000 d) Salaries accrued Tk.1,000 e) Consultancy service provided it has not been recorded Tk.1,000 Requirements: 1. Journalize the adjusting entries for the month in the books of ABC Ltd. 2. Post the adjusting entries into ledger accounts. 3. Prepare adjusted trial balance as at January 31, 2010.

MOstofa, MBM 16th Batch, BIBM

C#503 PROBLEMS AS PER LECTURES Solution-1: ABC Ltd. Adjusting Journal

Date/ SRL No. a) Explanation Insurance Expense A/C Dr. Pre-paid Insurance A/C Cr. [Pre-paid Insurance as worth Tk.150 has been expired during the month] Supplies Expense A/C Dr. Supplies A/C Cr. [Supplies expensed Tk.1000] Depreciation A/C Dr. Equipment A/C Cr. [Depreciation on equipment for the month was Tk.1000] Salaries Expense A/C Dr. Salaries Payable A/C Cr. [Salaries accrued Tk.1000] Cash A/C Dr. Consulting Fees A/C Cr. [Consulting fees was not recorded] Interest Expense A/C Dr. Interest Payable A/C Cr. [Interest rate on notes payable is 12%] Total Ref. Debit (Tk.) 150 Credit (Tk.) 150 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 300 300 4,450 4,450

b)

c)

d)

e)

f)

Solution-2: ABC Ltd. Adjusting Ledger

Insurance Expense A/C A/C No.: Dr. Pre-paid Insurance Cr. 150 Dr. Balance on Jan 31,2010 Pre-paid Insurance A/C A/C No.: Cr. 2400 Insurance Exp. 150

Adj. Balance 150

150 150 2400

Adj. Balance

2250 2400

Supplies Expense A/C A/C No.: Dr. Supplies A/C Cr. 1000 Dr. Balance on Jan 31,2010

Supplies A/C A/C No.: Cr. 1300 Supplies Exp. 1000

Dr.

Insurance Depreciation Expense A/C A/C A/C Adj. Balance A/C A/C No.: 1000 150

1000 1000 Cr. Dr.

Insurance Equipment Expense A/C A/C Adj. Balance A/C No.: 1300

300 1300 Cr.

Pre-paid Insurance

Pre-paid Insurance 150 MOstofa, MBM

16th Batch, BIBM

150 150

Adj. Adj. Balance Balance 150

150 150 150 150 150

Adj. Balance

C#503 PROBLEMS AS PER LECTURES

Salary Expense A/C A/C No.: Dr. Balance on Jan 31,2010 Salary Payable Cr. 3200 1000 Adj. Balance 4200 4200 4200 100 0 1000 1000 Dr. Salary Exp. Salary Payable A/C A/C No.: Cr. 1000

Adj. Balance

Depreciation A/C A/C No.: Dr. Equipment Cr. 1000 Dr. Balance on Jan 31,2010

Equipment A/C A/C No.: Cr. 6000 0 Depreciation 1000

Adj. Balance 1000

1000 1000 6000 0

Adj. Balance

5900 0 6000 0

Cash A/C A/C No.: Dr. Balance on Jan 31,2010 Consulting Fee Cr. 5400 1000 Adj. Balance 6400 6400 6400 Dr.

Consulting Fees A/C A/C No.: Balance on Jan 31,2010 Cash 1590 0 15900 1590 0 Cr. 1490 0 1000

Adj. Balance

Interest A/C A/C No.: Dr. Interest Payable Cr. 300 Dr.

Interest Payable A/C A/C No.: Cr. Interest Expense 300

Adj. Balance 300

300 300

Adj. Balance

300 300 300

MOstofa, MBM 16th Batch, BIBM

C#503 PROBLEMS AS PER LECTURES Solution-3:

ABC Ltd. Adjusted Trial Balance January 31, 2010 Account Title Cash Accounts Receivable Pre-paid Insurance Supplies Equipment Notes payable (12%) Accounts Payable Salary Payable Interest Payable Capital Drawings Consulting Fees Salary Expense Utilities Expense Advertising Expense Supplies Expense Insurance Expense Interest Expense Depreciation Total Debit (Tk.) 6,400 2,800 2,250 300 59,000 Credit (Tk.)

30,000 2,400 1,000 300 30,000 1,000 15,900 4,200 800 400 1,000 150 300 1,000 79,600

79,600

MOstofa, MBM 16th Batch, BIBM

C#503 PROBLEMS AS PER LECTURES Question (modified): XYZ Ltd. is a provider of taxation services. The following unadjusted trial balance has been taken from the books of accounts the company. XYZ Ltd. Trial Balance January 31, 2010 Account Title Cash Accounts Receivable Pre-paid Insurance FDR (10%) Supplies Equipment Notes payable (12%) Accounts Payable Capital Drawings Consulting Fees Salary Expense Utilities Expense Advertising Expense Total Debit (Tk.) 5,400 2,800 2,400 12,000 1,300 60,000 Credit (Tk.)

30,000 2,400 40,000 1,000 16,900 3,200 800 400 89,300

89,300

Adjustments: f) Insurance expires at the rate of Tk.150 per month g) Supplies on hand at the end of the month Tk.300 h) Monthly depreciation on equipment is Tk.1,000 i) Salaries accrued Tk.1,000 j) Consultancy service provided it has not been recorded Tk.1,000 Requirements: 4. Journalize the adjusting entries for the month in the books of XYZ Ltd. 5. Post the adjusting entries into ledger accounts. 6. Prepare adjusted trial balance as at January 31, 2010

MOstofa, MBM 16th Batch, BIBM

C#503 PROBLEMS AS PER LECTURES Solution-1: XYZ Ltd. Adjusting Journal

Date/ SRL No. a) Explanation Insurance Expense A/C Dr. Pre-paid Insurance A/C Cr. [Pre-paid Insurance as worth Tk.150 has been expired during the month] Supplies Expense A/C Dr. Supplies A/C Cr. [Supplies expensed Tk.1000] Depreciation A/C Dr. Equipment A/C Cr. [Depreciation on equipment for the month was Tk.1000 Salaries Expense A/C Dr. Salaries Payable A/C Cr. [Salaries accrued Tk.1000] Cash A/C Dr. Consulting Fees A/C Cr. [Consulting fees was not recorded] Interest Expense A/C Dr. Interest Payable A/C Cr. [Interest rate on notes payable is 12%] Interest Receivable A/C Dr. Interest Revenue Cr. [Interest rate on FDR is 10%] Total Ref. Debit (Tk.) 150 Credit (Tk.) 150 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 300 300 100 100 4,550 4,550

b)

c)

d)

e)

f)

g)

Solution-2: XYZ Ltd. Adjusting Ledger

Insurance Expense A/C A/C No.: Dr. Pre-paid Insurance Cr. 150 Dr. Balance on Jan 31,2010 Pre-paid Insurance A/C A/C No.: Cr. 2400 Insurance Exp. 150

Adj. Balance 150

150 150 2400

Adj. Balance

2250 2400

Supplies Expense A/C A/C No.: Dr. Supplies A/C Cr. 1000 Salary Expense A/C Insurance Depreciation Expense A/C A/C A/C A/C No.: A/C A/C No.: Adj. Balance Dr. Balance on Jan 31,2010

Supplies A/C A/C No.: Cr. 1300 Supplies Exp. 1000

Dr. Dr. on Jan 1000 Balance 31,2010 Pre-paid Insurance 3200 150 Salary Payable 1000

1000 Cr. Cr. 1000

Dr. Dr.

Salary Payable A/C Insurance Equipment Expense A/C A/C A/C No.: A/C No.: Adj. Balance 1300 150 Salary Exp.

300 Cr. Cr. 1300 1000

Pre-paid Insurance MOstofa,

MBM 16th Batch, BIBM

Adj. Balance 150 150 1000

Adj. Balance Adj. Adj. Balance Balance 4200 150

4200 150 150 4200 150 150

Adj. Balance

100 0 150 1000

C#503 PROBLEMS AS PER LECTURES

Depreciation A/C A/C No.: Dr. Equipment Cr. 1000 Dr. Balance on Jan 31,2010

Equipment A/C A/C No.: Cr. 6000 0 Depreciation 1000

Adj. Balance 1000

1000 1000 6000 0

Adj. Balance

5900 0 6000 0

Cash A/C A/C No.: Dr. Balance on Jan 31,2010 Consulting Fee Cr. 5400 1000 Adj. Balance 6400 6400 6400 Dr.

Consulting Fees A/C A/C No.: Balance on Jan 31,2010 Cash 1790 0 17900 1790 0 Cr. 1690 0 1000

Adj. Balance

Interest A/C A/C No.: Dr. Interest Payable Cr. 300 Dr.

Interest Payable A/C A/C No.: Cr. Interest Expense 300

Adj. Balance 300

300 300

Adj. Balance

300 300 300

Interest Receivable A/C A/C No.: Dr. Interest Revenue Cr. 100 Dr.

Interest Revenue A/C A/C No.: Cr. Interest Receivable 100

Adj. Balance 100

100 100

Adj. Balance

100 100 100

Solution-3:
MOstofa, MBM 16th Batch, BIBM

C#503 PROBLEMS AS PER LECTURES

XYZ Ltd. Adjusted Trial Balance January 31, 2010 Account Title Cash Accounts Receivable Interest Receivable Pre-paid Insurance Supplies FDR (10%) Equipment Notes payable (12%) Accounts Payable Salary Payable Interest Payable Capital Drawings Consulting Fees Interest Revenue Salary Expense Utilities Expense Advertising Expense Supplies Expense Insurance Expense Interest Expense Depreciation Total Debit (Tk.) 6,400 2,800 100 2,250 300 12,000 59,000 Credit (Tk.)

30,000 2,400 1,000 300 40,000 1,000 17,900 100 4,200 800 400 1,000 150 300 1,000 91,700

91,700

MOstofa, MBM 16th Batch, BIBM