Income Statement

Q1) Missing Figures

Each of the six horizontal lines in the following table represents a separate set
Beginning Net Ending Cost of Gross
Inventory Purchases Inventory Goods sold Profit/loss Net Sales
1 10,000 50,000 ? 44,000 ? 70,000
2 12,000 ? 10,000 ? 18,000 60,000
3 ? 72,000 18,000 ? 20,000 95,000
4 ? 50,000 15,000 55,000 ? 50,000
5 20,000 70,000 ? 82,000 5,000 ?
6 22,000 ? 18,000 72,000 28,000 ?

Required
Copy the above table and fill in the missing amounts, show calculations
Hint: to solve this question use formulas of income statement
GP=Sales – COGS
Opening + purchase – ending = COGS
Q2) Following are some selected accounts from the post closing trial balance of Mr. Jamshed.
Cash 100,000
Accounts Receivable 500,000
Prepaid Advertising 5,000
Office Supplies 2,000
Office Equipment 300,000
Capital 662,000
Drawing 5,000
Prepaid Rent 20,000
Salary payable 4,000
Unearned Consulting Fee 15,000
Allowance for Depreciation 30,000
Net Income 221,000

Required
Prepare a classified Balance Sheet
Q3) Following are some selected balances extracted from the Trial Balance of Munir and Sons on Dec
31, 2011.
Depreciation Expense - Equipment 500
Inventory – January 1, 2011 22,500
Purchases 75,000
Purchase Discount 1,500
Purchase Return 2,500
Rent Expense 6,000
Salaries Expense 9,000
Sales 115,000
Sales Discount 2,100
Sales Return 3,900
Supplies Expense 800
Transportation in 4,200
Inventory – December 31, 2011 25,800

Required
Prepare Income Statement

Q4) Following are some selected accounts from the trial balance of Nadir Company for the period
ended December 1996
Rent Expense 3,600
Salary Expense 4,200
Commission Income 13,600
Supplies Expense 300
Advertising Expense 400
Depreciation Expense 2,000
Allowance for Depreciation 6,000

Required
Prepare Income statement

Q5) Following are some selected accounts from the trial balance of ABC Company for the period
ended December 1996
 Sales 250,000
Sales Discount 5,000
Merchandise Inventory (1.1.1996) 10,000
Merchandise Inventory (31.12.1996) 15,000
Purchases 53,000
Purchase Return 1,350
Freight-in 200
Supplies Expense 10,000
Depreciation Expense 5,000
Utility Expense 4,000
Bad Debts Expense 3,000
Commission Income 1,000

Required
Prepare Income statement

Q6) Following is the adjusted trial balance of Zaidi Co. for the period ended Jun 2009

Particular Dr Cr
Cash 9,200
Accounts receivable 21,400
Merchandise Inventory opening 3,200
Prepaid rent 600
Furniture 12,000
Accumulated Depreciation 3,000
Unearned Commission 1,200
Zaidi Capital 48,400
Sales 30,000
Sales Discount 300
Purchases 32,000
Purchase Return 500
Transportation-in 500
Salaries Expense 4,800
Rent Expense 2,400
Bad Debts Expense 1,400
Allowance for Bad Debts 1,400
 Depreciation Expense 600
Commission Income 2,400
Salaries payable 1,500
88,400 88,400
Ending inventory is 8,800

Required: Prepare Income statement and Classified Balance Sheet

Q7) Following is the adjusted trial balance of Maham Co for the period ended December 2006

Particular Dr Cr
Cash 26,000
Office Supplies 6,000
Accounts receivable 24,000
Equipment 36,000
Salaries Expense 20,000
Advertising expense 3,200
Accumulated Depreciation 11,000
Account payable 5,000
Capital 56,000
Commission Income 74,000
Unearned Commission 5,000
Office supplies expense 8,000
Commission Receivable 9,000
Prepaid Advertising 12,800
Depreciation Expense 6,000
Utility Expense 7,000
Utility payable 7,000
158,000 158,000

Required
Prepare:
Income statement
Classified Balance Sheet

Q8) Following is the adjusted trial Balance of Mr. Adil

 Particular Dr Cr
Rent Expense 3,000
Salaries Expense 25,000
Office supplies expense 1,000
Equipment 60,000
Merchandise Inventory Opening 25,000
Cash 40,000
Capital 113,000
Sales 215,000
Sales Return 5,000
Prepaid Rent 2,000
Cost of Goods Sold 170,000
Salaries payable 5,000
Office supplies expense 2,000
Depreciation Expense 6,000
Allowance for Depreciation 6,000
339,000 339000

Required
Prepare:
Income statement
Classified Balance Sheet

Q9) Following is the adjusted trial balance of Ghazi Company for the period ended December 2002
Particular Dr Cr
Cash 4,980
Commission Receivable 3,850
Office supplies 240
Office Equipment 6,600
Allowance for Depreciation 2,530
Accounts Payable 1,660
Salaries payable 550
Unearned Commission 190
Capital 12,300
Drawing 1,000
 Commission Earned 7,960
Salaries Expense 6,550
Rent Expense 1,500
Office Supplies Expense 360
Depreciation Expense 110
25,190 25190

Required
Prepare:
Income statement
Classified Balance Sheet

Q10) Following is the adjusted trial Balance of Mr. Zubair

Particular Dr Cr
Cash 25,000
Merchandise Inventory 20,000
Accounts Receivable 80,000
Allowance for Bad Debts 4,000
Supplies 10,000
Prepaid Insurance 10,000
Furniture 40,000
Allowance for Depreciation 15,000
Accounts Payable 40,000
Unearned Commission 5,000
Capital 100,000
Drawing 12,000
Sales 200,000
Sales Return and Allowance 8,000
Purchases 140,000
Purchase Discount 5,000
Salaries Expense 20,000
Rent Expense 5,000
Salaries payable 5,000
Insurance Expense 5,000
Depreciation Expense 3,000
 Bad Debts Expense 6,000
Commission Income 10,000
384,000 384,000

Required
Prepare:
Income statement
Classified Balance Sheet

Q11) Following is the Adjusted Trial Balance of Samar Co.

Particular Dr Cr
Cash 100,000
Accounts Receivable 500,000
Prepaid Advertising 5,000
Office Supplies 2,000
Office Equipment 300,000
Capital 662,000
Drawing 5,000
Consulting Fee Income 385,000
Salary Expense 35,000
Rent Expense 40,000
Insurance Expense 10,000
Repair Expense 6,000
Office Supplies Expense 8,000
Prepaid Rent 20,000
Salary payable 4,000
Unearned Consulting Fee 15,000
Allowance for Depreciation 30,000
Advertising Expense 35,000
Depreciation Expense 30,000
1,096,000 1,096,000

Required:
Prepare
Income Statement
Balance Sheet

Q12) Pre-closing Trial Balance of ABC Corp. on December 31, 2010 is as under

Particulars Dr. Cr.

Cash -------------------------------------------------------------------------- 1,200
Supplies --------------------------------------------------------------------- 800
Prepaid Advertising ------------------------------------------------------- 6,000
Rent Expense -------------------------------------------------------------- 3,000
Furniture ------------------------------------------------------------------- 10,000
Salaries expense ----------------------------------------------------------- 5,000
Allowance for depreciation ---------------------------------------------- 2,000
Capital ---------------------------------------------------------------------- 10,000
Commission Income ------------------------------------------------------ 14,000
26,000 26,000

Data for adjustment

1. Office Supplies on hand Rs. 500
2. Advertisement cost unexpired Rs. 2,000
3. Current year depreciation is 20 % of the cost of furniture
4. Prepaid salaries 800
5. Actual rent expense for the year is Rs. 3,600
6. Commission receivable Rs. 300
7. Unearned Commission Rs. 700
Required
Prepare:
Adjusting entries
Adjusted Trial Balance
Income Statement
Closing entries
Balance Sheet
After completing all the steps mentioned above, prepare a ten column work sheet
Q13) Unadjusted Trial Balance of Waseem Co. on June 30, 2009 is as under

Cash 100,000
Accounts Receivable 500,000
Prepaid Advertising 40,000
 Office Supplies 10,000
Office Equipment 300,000
Waseem Capital 662,000
Waseem Drawing 5,000
Consulting Income 400,000
Salaries Expense 31,000
Rent Expense 60,000
Insurance Expense 10,000
Repairs Expense 6,000
1,062,000 1,062,000
Data for adjustments on June 30, 2009
1. Supplies on hand at the end of the period Rs. 2,000
2. Unexpired rent amounted to Rs. 20,000
3. Salaries Rs. 4,000 are payable
4. Consulting fee still unearned amounted to Rs. 15,000
5. The office equipment is estimated to have a useful life of 10 years with no salvage value. Use the
straight line method to calculate the depreciation before passing adjusting entry
6. Advertising expense for the year amounted to Rs. 35,000
Required
Prepare:
Adjusting entries
Adjusted Trial Balance
Income Statement
Closing entries
Balance Sheet
After completing all the steps mentioned above, prepare a ten column work sheet

Q14) On January 5, 2005, Zafar started a business with cash investment of Rs. 200,000 and equipment
worth Rs. 50,000. He completed the following transactions during the year 2005
1. Purchased merchandise on account for Rs. 60,000
2. Merchandise returned to supplier Rs. 5,000
3. Cash paid to supplier Rs. 20,000
4. Purchased merchandise for cash Rs. 25,000
5. Sold merchandise on account Rs. 90,000
6. Merchandise retuned from customer Rs. 10,000
7. Cash collected from customer Rs. 15,000
8. Sold merchandise for cash Rs. 60,000
9. Purchased equipment for Rs. 10,000 and furniture for Rs. 20,000 by paying 6,000 cash and a
promissory note for the remainder
10. Salaries expense Rs. 25,000
11. Commission income collected Rs. 15,000
Supplementary data for adjustments on 31.12.2005
1. Depreciation on furniture was estimated at Rs. 3,000 and on equipment at Rs. 4,500
2. Prepaid salaries was Rs. 4,000
3. Unearned commission Rs. 2,500
4. Merchandise Inventory is valued at Rs. 10,000
Required
Prepare General Journal, T Accounts and trial Balance
Adjusting Entries
Adjusted Trial Balance
Income Statement
Balance Sheet

Q15) Following is the pre-closing trial balance of Saba Co. on December 31, 2010

Particular Dr Cr
Cash 20,000
Accounts Receivable 30,000
Allowance for doubtful debts 500
Merchandise Inventory 20,000
Prepaid Advertising 10,000
Equipment 40,000
Allowance for Depreciation 2,500
Accounts Payable 10,000
Capital 50,000
Commission Income 10,000
Sales 200,000
Cost of Goods Sold 123,000
Salaries Expense 15,000
Office Supplies Expense 5,000
Rent Expense 6,400
Insurance Expense 3,600
273,000 273,000
Data for adjustments on December 31, 2010
1. Office Supplies used Rs. 2,000
2. Salaries expense for the year amounted to Rs. 12,000
3. Commission earned during the year Rs. 8,000
4. Prepaid advertising Rs. 4,000
5. Rent expense for the year amounted to Rs. 8,000
6. Insurance expense represents a 3 year insurance policy paid on August 1, 2010
7. Depreciation on equipment was estimated Rs. 1,000
8. Total of doubtful debts on accounts receivable was estimated at Rs. 1,000
Required
Adjusting, adjusted TB, income statement, balance sheet

Q16) Following is the pre-closing trial balance of Faheem Traders on July 31, 2005

Particular Dr Cr
Cash 4,755
Accounts Receivable 2,000
Merchandise Inventory 2,700
Unexpired Insurance 486
Advertising Supplies Expense 835
Office Equipment 8,520
Accumulated Depreciation - Office Equipment 276
Accounts Payable 4,800
Capital 13,140
Cost of Goods Sold 4,600
Sales Revenue 8,580
Salaries Expense 2,000
Sales Discount 500
Sales Return 400
26,796 26,796

Data for Adjustments

1. Insurance expense for the month Rs. 18
2. Advertising supplies on hand Rs. 507
3. Depreciation Expense on equipment Rs. 75
4. Salaries prepaid Rs. 150
5. Salaries earned by employees but not yet paid Rs. 200
6. Provide for bad debts at 10% of accounts receivable
Required
Adjusting, adjusted TB, income statement, balance sheet

Q17) Following is the unadjusted trial balance taken from the books of Fahad Company on March 31,
2001

Particular Dr Cr
Cash 5,000
Accounts Receivable 12,000
Merchandise Inventory 10,000
Prepaid Insurance 4,000
Office Equipment 50,000
Allowance for depreciation (Office Eq.) 10,000
Accounts Payable 8,000
Capital 52,300
Drawing 6,000
Sales 80,000
Sales Discount 4,000
Purchases 40,000
Purchase return and allowance 5,000
Transportation-in 5,800
Advertising expense 8,500
Salaries Expense 10,000
155,300 155,300

Data for Adjustment

1. Make allowance for doubtful accounts at 10% of accounts receivable at year end
2. Insurance expired Rs. 2,500
3. Record for depreciation on office equipment Rs. 2,000
4. Advertising prepaid was Rs. 1,200
5. Unpaid salaries were Rs. 2,000
6. Merchandise Inventory on March 31, 2001 Rs. 15,000
Required
Adjusting, adjusted TB, income statement, balance sheet
Q18) Following balances were taken from the General Ledger of Mr. Sami, for the year ended on 30 th
June 2009

Cash 12,800
Merchandise Inventory 11,200
Accumulated Depreciation - Furniture 3,600
Office Supplies 2,000
Accounts Receivable 16,000
Freight-in 1,250
Furniture 10,000
Bank Overdraft 7,400
Accounts Payable 12,800
Sales 130,400
Commission Income 4,600
Salaries Expense 19,000
Capital 42,000
Purchases 89,950
Insurance Expense 1,800
Prepaid Rent 36,000

Additional Data to be adjusted

1. Merchandise Inventory on 30 th June, 2009 was valued Rs. 15,000
2. Rent expired at the rate of Rs. 2,000 per month
3. Salaries outstanding Rs. 3,500
4. During the year three fifth office supplies were consumed
5. One fourth of the commission income was received for the work to be done next year
6. Depreciation on furniture Rs. 640
7. Six months’ interest on bank overdraft is due at 18% p.a.
8. Insurance premium is paid for one year up to 31st March, 2010
Required
Prepare:
Adjusting Entries
Income Statement