PRINCIPLES OF ACCOUNTING
| KARACHI UNIVERSITY BUSINESS SCHOOL UNIVERSITY OF KARACHI FINAL EXAMINATION JUNE 2011; AFFILIATED COLLEGES PRINCIPLES OF ACCOUNTING BA (H) – 331 BS – I |
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| Date: June 20, 2011 | Max Time: 3 Hrs Max Marks: 60 |
| Instruction: Attempt all questions | |
Q.No.1 The following trial balance was taken from the books of Faraz Corporation on December 31, 2007.
| Account | Debit | Credit | |
| Cash | Rs | 12,000 | |
| Accounts Receivable | 40,000 | ||
| Note Receivable | 7,000 | ||
| Allowance for Doubtful Accounts | Rs 1,800 | ||
| Merchandise Inventory | 44,000 | ||
| Prepaid Insurance | 4,800 | ||
| Furniture and Equipment | 125,000 | ||
| Accumulated Depreciation—Furniture and Equipment | 15,000 | ||
| Accounts Payable | 10,800 | ||
| Common Stock | 44,000 | ||
| Retained Earnings | 55,000 | ||
| Sales | 280,000 | ||
| Cost of Goods Sold | 111,000 | ||
| Salaries Expense | 50,000 | ||
| Rent Expense | 12,800 | ||
| Totals | Rs 406,600 | Rs 406,600 |
At year end, the following items have not yet been recorded.
- Insurance expired during the year, Rs 2,000.
- Estimated bad debts, 1% of gross sales.
- Depreciation on furniture and equipment, 10% per year.
- Interest at 6% is receivable on the note for one full year.
- Rent paid in advance at December 31, Rs 5,400 (originally charged to expense).
- Accrued salaries at December 31, Rs 5,800.
Instructions
- Prepare the necessary adjusting entries.
- Prepare the necessary closing entries.
Q.No.2
Naveed Ship Company’s bank statement for the month of September showed a balance per bank of Rs 7,000. The company’s Cash account in the general ledger had a balance of Rs 4,667 at September 30. Other information is as follows:
(1) Cash receipts for September 30 recorded on the company’s books were Rs 4,200 but this amount does not appear on the bank statement.
(2) The bank statement shows a debit memorandum for Rs 40 for check printing charges.
(3) Check No. 119 payable to Laiq Company was recorded in the cash payments journal and cleared the bank for Rs 248. A review of the accounts payable subsidiary ledger shows aRs 36 credit balance in the account of Laiq Company and that the payment to them should have been for Rs 284.
(4) The total amount of checks still outstanding at September 30 amounted to Rs 5,800.
(5) Check No. 138 was correctly written and paid by the bank for Rs 429. The cash payment journal reflects an entry for Check No. 138 as a debit to Accounts Payable and a credit to Cash in Bank for Rs 492.
(6) The bank returned an NSF check from a customer for Rs 550.
(7) The bank included a credit memorandum for Rs 1,260 which represents collection of a customer’s note by the bank for the company; principal amount of the note was Rs 1,200 and interest was Rs 60. Interest has not been accrued.
Instructions
- Prepare bank reconciliation for Naveed Ship Company at September 30.
- Prepare any adjusting entries necessary as a result of the bank reconciliation.
Q.No.3
Following is the trial balance of MAX Company:
| Trial Balance | ||
| Account Titles | Debit | Credit |
| Cash | 30 | |
| Accounts Receivable | 12 | |
| Prepaid Rent | 8 | |
| Supplies | 10 | |
| Office Equipment | 50 | |
| Accum. Depreciation— Equipment | 10 | |
| Accounts Payable | 20 | |
| Yasir, Capital | 30 | |
| Yasir, Drawing | 2 | |
| Rent Revenue | 82 | |
| Depreciation Expense | 6 | |
| Rent Expense | 4 | |
| Salaries Expense Totals | 20
142 |
142 |
Adjustment data:
- Prepaid rent expired during August, Rs 2.
- Depreciation expense on office equipment for the month of August, Rs 10.
- Supplies on hand on August 31 amounted to Rs 6.
- Salaries expense incurred at August 31 but not yet paid amounted to Rs 15.
Instructions
- Prepare Income Statement
- Prepare Balance Sheet