You are on page 1of 8

Name

:

Mohammed Abdullah F/Name :

Mohammed Ali

Enrollment:

2010 E- 037

Class: SUBJECT: TOPIC: Teacher: Assignment:

MBA (2nd quarter)
Accounting.
The basis for business decisions.
The accounting cycle preparing an Report. Accounting for merchandising activities. Financial Assets. (Mr. Naeem Ahmed Khan) annual

2nd
Date: 02/02/2011

Exercise : 4-13

Fisher Insurance Agency Work sheet For the month ended January 31st , 2001 Trial Balance Dr Cr Adjustments Dr 850 210 550 360 110 2080 Cr 360 110 550 1060 2080 Adjusted Trial Balance Dr Cr 4980 3850 240 6600 1000 6550 1500 360 110 25190 2530 1660 550 190 12300 7960 25190
Jan,31

Date
Jan,31

Explanation /title of account
Commission receivable a/c Commission earned a/c Receive amount of commission receivable. Un earned commission a/c Commission earned a/c To apportion the unearned commission. Office supplies exp a/c Office supplies a/c To record the office supplies expanse for January. Dep-exp-off-equipment a/c Acc-dep-off-equipment a/c To record the depreciation expanse. Salaries expanse a/c Salaries payable a/c To record the salaries expanse.

Debit
850

Credit
850

Balance sheet accounts: Cash ………………..... Commission receivable. Office supplies ……. Office equipment……. Acc-dep-office equip….. Accounts payable……….. Salaries payable……… Un earned commission… Pat Fisher capital. Pat Fisher drawing…… Income statement accounts: Commission earned… Salaries expanse……... Rent expanse……. Office supplies expanse. Dep-exp-office-equip …………………………………..

$4980 3000 600 6600 1000 6000 1500 23680

2420 1660 400 12300 6900 23680

210 210

Jan,31

360 360

Jan,31

110 110 550 550

Jan,31

Adjustments: a) Depreciation expanse office equipment for the month. b) Concession revenue earned during January. c) Office supplies expanse for the month. d) Salaries expanse for the month. e) Commission earned during the month.

Problem no: 4-10 (a)

Island Hopper Work sheet For the month ended June 30, 2001 Trial Balance Dr Cr Adjustments Dr 4600 38650 Cr 4800 2100 10000 3300 5000 43250 Adjusted Trial Balance Dr Cr 23600 11800 48000 18900 1200000 7000 53800 70000 12900 2100 4800 10000 5000 1424700 390000 60000 3300 5000 21350 230850 174200 1424700 Income Statement Dr Cr 53800 70000 2100 4800 10000 5000 158600 15600 174200 230850 174200 174200 Balance sheet Dr 23600 11800 4800 18900 1200000 7000 1266100

Cr 390000 600000 3300 5000 21350 230850 1250500 15600 1266100

Balance sheet accounts: Cash ………………..... Account receivable ….. Prepaid rent …………. Unexpired insurance…. Aircraft………………. Acc-dep-Aircraft…….. Notes payable……….. Salaries payable……… Interest payable……… Unearned passenger revenue. Mary Erhart capital…… Mary Erhart drawing … Income statement accounts: Freight revenue……… Fuel expanse………... Salaries expanse……. Maintenance expanse. Insurance expanse…… Rent expanse………… Dep-exp-aircraft……... Interest expanse……… ………………………. Net Income………….. Totals……………......

$23600 7200 9600 21000 1200000 230850 7000 53800 66700 12900 1401800

380000 600000 60000 -

130950 3300 12900 1401800 2100 4800 10000 5000 68450

68450

174200 1266100

Adjustments: f) Depreciation expanse of aircraft for the month. g) Portion of revenue collected in advance but earned during June. h) Salaries owed to employees but unpaid as of month-end. i) Accrued interest on notes payable at June 30. j) Revenue earned but yet to be receivable of service rendered. k) Prepaid paid rent applicable to June. g) Insurance expiring during June.

Exercise No: 5-7(a)
1) the inventory on hand at the end of the 1st year = $10400 2) during 2nd year purchases of merchandise for sale to customer totaled = $105000 3) inventory on hand at the end of 2nd year = $9600 Inventory at the 1st year end-and 2nd year-end were determined by taking a complete physical inventory at (or very near) each year end because the inventory account was not updated as transaction occurred during 2 nd year it still show a balance of (10400) the inventory on hand at the beginning of the year. The $105000 cost of merchandise purchased during the 2nd year was recorded in the purchase account. Exercise No: 5-7 (b) Determination of “CGS” Inventory beginning of the 2nd year…………………………. Add: purchases during 2nd year……………………………... Cost of goods available for sale…………………………….. Less: inventory end of the 2nd year………………………….. Cost of goods sold…………………………………………... Exercise No: 5-7(c) Closing entries by the contribution of “Cost of Goods Sold” account. Date Title of account / Explanation Dec,31 Cost of goods sold a/c Inventory beginning balance a/c Purchases a/c To close the temporary accounts contributing to the contributing to the cost of goods sold. Dec,31 Inventory (year end balance) a/c Cost of goods sold a/c To reduce the balance of cost of goods sold account by the cost of merchandise still on hand at year-end.

$ 10400 $ 105000 $ 115400 $ 9600.00 $1058500

L.F.

Debit 115400

Credit 10400 105000

9600 9600

Exercise No: 5-7(d) Warren’s Gift Shop Income Statement For the month ended Dec 31st, 20... Revenue: Sales Less : Cost of goods sold Gross profit

198500 105800 90700

Exercise No: 5-7 (e) Periodic systems are used when the need for current information about inventories and sales does not justify the cost of maintaining a perpetual system. In a small retail store for example the owner may be so familiar with the inventory that formal perpetual inventory records are unnecessary most business large and small use the periodic systems for inventories that are immaterial in dollar amount, or when management has little interest in the quantities on hand a business like “Warren’s Gift Shop” that sell many low cost items and have manual accounting systems some times have no choice but to use the periodic method rather than perpetual method.

4

Problem no: 4-10
Island Hopper Adjusted trail Balance June 30th, 2001 Cash Account receivable Prepaid rent Unexpired insurance Aircraft Accumulated depreciation aircraft Notes payable Unearned passenger revenue Mary Earhart capital Mary Earhart drawing Freight revenue Fuel expanse Salaries expanse Maintenance expanse Insurance expanse Rent expanse Salaries payable Interest payable Interest expanse Depreciation expanse Aircraft Problem no: 4-10 (b) 23600 11800 4800 18900 120000 600000 7000 53800 70000 12900 2100 4800 5000 10000 1424700 Island Hopper Income statement For the month ended June 30, 2001 174200 53800 70000 12900 2100 4800 5000 10000 390000 21350 230850 174200 3300 5000 1424700

Revenue……………. Freight revenue Less expanses……….. Fuel expanse Salaries expanse Maintenance expanse Insurance expanse Rent expanse Interest expanse Depreciation expanse Aircraft Net income…… Problem no: 4-10(b) Island Hopper Statement of owner equity June 30th, 2001 Mary Earhart opening balance Add Net income Sub total………. Less Mary Earhart drawing Mary Earhart closing /ending balance Problem no: 4-10(b)

-158600 $15600

$230850 15600 246450 -7000 $239450 Island Hopper Balance sheet As on June 30th, 2001 Liability + Owner Equity Notes payable Salaries payable Interest payable Unearned passenger revenue Total liability………. Owner’s equity: Mary Earhart capital Total……………….

Assets Cash Accounts receivable Prepaid rent Unexpired insurance Aircraft 1200,000 Acc-dep-Aircraft 390,000

23600 11800 4800 18900 810,000

600,000 3300 5000 21350 629650

239450 Total assets……….. $869100 $869100 Problem no: 4-10(c) Note 1: Depreciation policies Depreciation in the financial statement is computed by the straight line method estimated useful life of aircraft is 20 years. Note 2: The maturity dates of liabilities The company notes payable consist of one obligation that matures on Dec, 31st, 2003 the maturity value of this notes payable will amount $600000.

5

Problem no: 4-10(d) Adjusting Entries Date June,30 Title of account / Explanation Depreciation exp Aircraft a/c Acc-dep-Aircraft a/c To record monthly depreciation Aircraft Unearned passenger revenue a/c Freight revenue a/c To record the revenue earned Salaries expanse a/c Salaries payable a/c To recode the salaries expanse during June Interest expanse a/c Interest payable a/c To record the interest payable Account receivable a/c Freight revenue a/c To record the amount of revenue receivable Rent expanse a/c Prepaid office rent a/c To record the rent expanse for the month Insurance expanse a/c Unexpired insurance a/c To recode the insurance expanse for the month L.F. Debit $10,000 10,000 38650 38650 3300 3300 5000 5000 4600 4600 4800 4800 2100 2100 Credit

June,30

June,30

June,30

June,30

June,30

June,30

Problem no: 4-10 (d) Closing Entries Date Title of account / Explanation June,30 Income summary a/c Fuel expanse a/c Salaries expanse a/c Maintenance expanse/c Insurance expanse a/c Rent expanse a/c Interest expanse a/c Dep-exp-Aircraft a/c To close expanse accounts. June,30 Freight revenue a/c Income summary a/c To close the revenue account. June,30 Mary Earhart capital a/c Mary Earhart drawing a/c To close the drawing account. June,30 Income summary a/c Mary Earhart capital a/c To close the income summary account.

L.F.

Debit 158600

Credit 53800 70,000 12900 2100 4800 5000 10,000

174200 174200 7000 7000 15600 15600

6

Exercise No: 5-10(a)
Date Title of account / Explanation Cost of goods sold a/c Inventory a/c To record the cost of good sold. Account receivable a/c. Sale a/c Sale merchandise on account. Invoice price $8000 terms 2/10, n/30. Cash a/c Sale Discount Expanse a/c Account receivable marine system a/c Collected $8000 account receivable from a customer who took 2% discount for early payment. L.F. Debit 4800 Credit 4800 8000 8000 7840 160 8000

2/10

Journal entries in the accounting record of Key Imports on account. Original cost of merchandise to Key Imports is $48, 00. The seller records the sale and related account receivable at the gross or full invoice price. Exercise No: 5-10(b, c) Journal entries to record the purchase of merchandise at net invoice price in the terms of 2/10 and n/30 in the accounting record Date Title of account / Explanation L.F. Debit Credit ……… Inventory a/c 7840 Accounts payable a/c 7840 To record the purchase at net cost. 2/10 7840 Account payable a/c. 7840 Cash a/c Paid cash within the discount period. n/30 7840 Account payable Key Imports a/c 160 Purchase discount lost Expanse a/c 8000 Cash a/c To record payment of invoice of invoice after expiration of discount period. of “Marine Systems”.

Exercise No: 7-5(a)
Data flow, Inc... Bank Reconciliation December 31st, 20... Balance as per bank statement, Dec 31st, 20…………………………………………………………………………… $ 15981 Add: deposit in transit……………………………………………………………………………………………………. $ 4353 Sub total…………………………………………………………………………………………………………………... $20334 Deduct: Out standing Checks. No. 620…………………………………….. $ 978 No. 630…………………………………….. $ 2052 No. 641…………………………………….. $ 483 $ 3513 Adjusted cash balance……………………………………………………………………………………………………... $16821 Balance per depositor’s record………………………………………………………………………………………….. $ 17445 Less: “NSF” checks of Jane Jones………… $ 600 Less: Service charges……………………… $ 24 The adjusted cash balance (as above)…………………………………………………………………………………… Exercise No: 7-5(b) Date Dec,31 Title of account / Explanation Service charges a/c cash a/c To record charges charged by the bank. Account receivable Jane Jones a/c. Cash a/c To record the “NSF” check. L.F. Debit 24 Credit 24 600 600 $ 16821

Dec,31

7

Exercise No: 7-5 (c) Company is hare paying bank charges of $ 24 because of depositing “NSF” check.

Problem no: 4-10 (d) Ledger accounts and closings.

(1) June,30 June,30 (2) June,30 (3) June,30 June,30 June,30 (4) June,30 (5) June,30 June,30 (6) June,30 (7) June,30 (8) June,30 June,30 (9) June,30 (10) June,30 June,30 (11) - June,30 (12) - June,30 June,30 (13) June,30 (14) June,30 (15) - June,30 (16) June,30 June,30 (17) June,30 June,30 June,30 (18) June,30

Depreciation expanse Aircraft a/c Accumulated Depreciation expanse Aircraft a/c Freight Revenue a/c Unearned passenger revenue a/c Interest expanse a/c Interest payable a/c Account receivable a/c Rent expanse a/c Prepaid office rent a/c Insurance expanse a/c Unexpired insurance a/c Salaries expanse a/c Salaries payable a/c Fuel expanse a/c Maintenance expanse a/c Mary Earhart capital a/c Income summary a/c Mary Earhart drawing a/c 7000 7000 -0Dr 158600 15600 174200 174200 15600 -0Cr Cr 7000 15600 230850 223850 239450 Cr Cr Cr 12900 12900 -0Dr 53800 53800 -0Dr 3300 3300 Cr 3300 70000 66700 70000 -0Dr Dr 2100 21000 18900 Dr Dr 2100 2100 2100 -0Dr 4800 9600 4800 Dr Dr 4800 4800 4800 -0Dr 4600 7200 11800 Dr 5000 5000 Cr 5000 500 5000 -0Dr 38650 60,000 21350 Cr Cr 174200 38650 4600 130950 169600 174200 -0Cr Cr Cr 10,000 380,000 390,000 Dr Dr 10,000 10,000 10,000 -0Dr

8