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C#503
PROBLEMSASPERLECTURES
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 Debit
(Tk.)
Credit
(Tk.)
Cash 5,400
Accounts Receivable 2,800
Pre-paid Insurance 2,400Supplies 1,300
Equipment 60,000
Notes payable (12%) 30,000
Accounts Payable 2,400
Capital 30,000
Drawings 1,000
Consulting Fees 14,900
Salary Expense 3,200
Utilities Expense 800
Advertising Expense 400
Total 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
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C#503
PROBLEMSASPERLECTURES
Solution-1:
ABC Ltd.
Adjusting Journal
Date/
SRL No.
Explanation Ref. Debit
(Tk.)
Credit
(Tk.)a) Insurance Expense A/C Dr. 150
Pre-paid Insurance A/C Cr. 150[Pre-paid Insurance as worth Tk.150 has beenexpired during the month]
b) Supplies Expense A/C Dr. 1,000
Supplies A/C Cr. 1,000
[Supplies expensed Tk.1000]
c) Depreciation A/C Dr. 1,000
Equipment A/C Cr. 1,000[Depreciation on equipment for the month wasTk.1000]
d) Salaries Expense A/C Dr. 1,000Salaries Payable A/C Cr. 1,000
[Salaries accrued Tk.1000]
e) Cash A/C Dr. 1,000
Consulting Fees A/C Cr. 1,000
[Consulting fees was not recorded]
f) Interest Expense A/C Dr. 300
Interest Payable A/C Cr. 300
[Interest rate on notes payable is 12%]
Total 4,450 4,450
Solution-2:
ABC Ltd.
Adjusting Ledger
MOstofa, MBM 16th Batch, BIBM
Pre-paid Insurance A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 2400
InsuranceExp. 150
Adj. Balance 2250
2400 2400
Equipment A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Depreciation A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/C
A/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Supplies Expense A/C
A/C No.:
Dr. Cr.
Supplies A/C 1000
Adj. Balance 1000
1000 1000
Supplies A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 1300 Supplies Exp. 1000
Adj. Balance 300
1300 1300
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C#503
PROBLEMSASPERLECTURES
MOstofa, MBM 16th Batch, BIBM
Salary Expense A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 3200
Salary Payable 1000
Adj. Balance 4200
4200 4200
Salary Payable A/C
A/C No.:
Dr. Cr.
Salary Exp. 1000
Adj. Balance1000
1000 1000
Depreciation A/C
A/C No.:
Dr. Cr.
Equipment 1000
Adj. Balance 1000
1000 1000
Equipment A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010
60000 Depreciation 1000
Adj. Balance5900
0
60000
60000
Cash A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 5400
Consulting Fee 1000
Adj. Balance 6400
6400 6400
Consulting Fees A/C
A/C No.:
Dr. Cr.
Balance onJan 31,2010
14900
Cash 1000
Adj. Balance1590
0
159001590
0
Interest A/C
A/C No.:
Dr. Cr.
Interest Payable 300
Adj. Balance 300
300 300
Interest Payable A/C
A/C No.:
Dr. Cr.
InterestExpense 300
Adj. Balance 300
300 300
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Solution-3:
ABC Ltd.
Adjusted Trial BalanceJanuary 31, 2010
Account Title Debit
(Tk.)
Credit
(Tk.)
Cash 6,400
Accounts Receivable 2,800
Pre-paid Insurance 2,250
Supplies 300
Equipment 59,000
Notes payable (12%) 30,000
Accounts Payable 2,400Salary Payable 1,000
Interest Payable 300
Capital 30,000
Drawings 1,000
Consulting Fees 15,900
Salary Expense 4,200
Utilities Expense 800
Advertising Expense 400
Supplies Expense 1,000
Insurance Expense 150
Interest Expense 300
Depreciation 1,000
Total 79,600 79,600
MOstofa, MBM 16th Batch, BIBM
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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 Debit
(Tk.)
Credit
(Tk.)
Cash 5,400
Accounts Receivable 2,800
Pre-paid Insurance 2,400
FDR (10%) 12,000
Supplies 1,300
Equipment 60,000Notes payable (12%) 30,000
Accounts Payable 2,400
Capital 40,000
Drawings 1,000
Consulting Fees 16,900
Salary Expense 3,200
Utilities Expense 800
Advertising Expense 400
Total 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
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Solution-1:
XYZ Ltd.
Adjusting JournalDate/
SRL No.Explanation Ref. Debit
(Tk.)Credit(Tk.)
a) Insurance Expense A/C Dr. 150Pre-paid Insurance A/C Cr. 150[Pre-paid Insurance as worth Tk.150 has beenexpired during the month]
b) Supplies Expense A/C Dr. 1,000
Supplies A/C Cr. 1,000
[Supplies expensed Tk.1000]
c) Depreciation A/C Dr. 1,000
Equipment A/C Cr. 1,000[Depreciation on equipment for the month wasTk.1000
d) Salaries Expense A/C Dr. 1,000
Salaries Payable A/C Cr.1,000[Salaries accrued Tk.1000]
e) Cash A/C Dr. 1,000
Consulting Fees A/C Cr. 1,000
[Consulting fees was not recorded]
f) Interest Expense A/C Dr. 300
Interest Payable A/C Cr. 300
[Interest rate on notes payable is 12%]
g) Interest Receivable A/C Dr. 100
Interest Revenue Cr. 100
[Interest rate on FDR is 10%]
Total 4,550 4,550
Solution-2:
XYZ Ltd.
Adjusting Ledger
MOstofa, MBM 16th Batch, BIBM
Pre-paid Insurance A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 2400
InsuranceExp. 150
Adj. Balance 2250
2400 2400
Equipment A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Depreciation A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/CA/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Insurance Expense A/C
A/C No.:
Dr. Cr.
Pre-paid Insurance 150
Adj. Balance 150
150 150
Supplies Expense A/C
A/C No.:
Dr. Cr.
Supplies A/C 1000
Adj. Balance 1000
1000 1000
Supplies A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 1300 Supplies Exp. 1000
Adj. Balance 300
1300 1300
Salary Expense A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 3200
Salary Payable 1000
Adj. Balance 4200
4200 4200
Salary Payable A/C
A/C No.:
Dr. Cr.
Salary Exp. 1000
Adj. Balance1000
1000 1000
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PROBLEMSASPERLECTURES
Solution-3:
MOstofa, MBM 16th Batch, BIBM
Depreciation A/C
A/C No.:
Dr. Cr.
Equipment 1000
Adj. Balance 1000
1000 1000
Equipment A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010
60000 Depreciation 1000
Adj. Balance5900
0
60000
60000
Cash A/C
A/C No.:
Dr. Cr.
Balance on Jan31,2010 5400
Consulting Fee 1000
Adj. Balance 6400
6400 6400
Consulting Fees A/C
A/C No.:
Dr. Cr.
Balance onJan 31,2010
16900
Cash 1000
Adj. Balance1790
0
179001790
0
Interest A/C
A/C No.:
Dr. Cr.
Interest Payable 300
Adj. Balance 300
300 300
Interest Payable A/C
A/C No.:
Dr. Cr.
InterestExpense 300
Adj. Balance 300
300 300
Interest Receivable A/C
A/C No.:
Dr. Cr.
Interest Revenue 100
Adj. Balance 100
100 100
Interest Revenue A/C
A/C No.:
Dr. Cr.
InterestReceivable 100
Adj. Balance 100
100 100
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C#503
PROBLEMSASPERLECTURES
XYZ Ltd.
Adjusted Trial Balance
January 31, 2010
Account Title Debit
(Tk.)
Credit
(Tk.)
Cash 6,400
Accounts Receivable 2,800
Interest Receivable 100
Pre-paid Insurance 2,250
Supplies 300
FDR (10%) 12,000
Equipment 59,000
Notes payable (12%) 30,000Accounts Payable 2,400
Salary Payable 1,000
Interest Payable 300
Capital 40,000
Drawings 1,000
Consulting Fees 17,900
Interest Revenue 100
Salary Expense 4,200
Utilities Expense 800
Advertising Expense 400
Supplies Expense 1,000
Insurance Expense 150
Interest Expense 300
Depreciation 1,000
Total 91,700 91,700
MOstofa, MBM 16th Batch, BIBM