Lecturer Nur Saffiya Chua Chy Ren

Course Code & Name BBC 1063 Principles of Accounting

Assignment  Group Assignment 1

Date of Submission  3rd May, 2021

Group Members

Name ID

Nada Wangsoh AIU19092031

Sulfa Akem AIU19092032

Nayama AIU20092072

Muntasir Ahmmed AIU20092093

M. Fithratul Wahyi Yaumi AIU19092077

Shahriar Hossain AIU19092093

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1. Edison Graphics Company was organized on January 1, 2019, by Cameron Edison. At

the end of the first months of operations, the trial balance contained the accounts as
following: (35m)

Debit Credit
Cash $ 8,600 Notes Payable $ 20,000
Accounts Receivable 14,000 Accounts Payable 9,000
Equipment 45,000 Owner’s Capital 22,000
Prepaid Insurance 2,700 Sales Revenue 52,100
Salaries Expense 30,000 Service Revenue 6,000
Supplies Expense 3,700 $ 109,100
Advertising Expense 1,900
Rent Expense 1,500
Utilities Expense 1,700
$ 109,100

Analysis reveals the following additional data:

(a) The $3,700 balance in Supplies Expense represents supplies purchased in
January. At June 30, $2,200 of supplies are on hand.
(b) The note payable was issued on January 1. It is 12%, 6 months note.
(c) The balance in Insurance Expense is the premium on a one-year policy, date
February 1, 2019.
(d) Service Revenue are credited to revenue when received. At June 30, services
revenue of $ 1,800 are unearned.
(e) Revenue for services performed but unrecorded at June 30 totals $ 2,600.
(f) Depreciation is $4,500 per year.
Required:
(a) Journalize the adjusting entries at June 30. (Assume adjustments are recorded
every 6 months)
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(b) Prepared an adjusted trial balance.

Answer (a)

Edison Graphics Company

Adjusting Journal

June 30, 2019

Date Account titles and Explanations Ref. Debit Credit

June Supply Expense 1500
30             Supplies 1500
(To record supplies used [3700-2200])
June Interest Expense 1200
30          Interest Payable 1200
(To record interest expense [{20,000*12%}*6/12])
June Insurance Expense 1125
30             Prepaid Insurance 1125
(To record insurance expense [2700*{5/12}])
June Service revenue 1800
30              Unearned service revenue 1800
(To record unearned service revenue)
June Account receivable 2600
30             Service revenue 2600
(To record Service performed but unrecorded)
June Depreciation Expense 2250
30              Accumulated depreciation-Equipment 2250
( To record depreciation expense for 6 months [4500/2])
10,475 10,475

Answer (b)
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Edison Graphics Company

Trial Balance

June 30, 2019

Unadjusted trial Adjustments Adjusted trial

balance balance

Debit  Credit Debit  Credit Debit  Credit

Cash  8,600 8,600

Account Receivable  14,000 2600 16,600

Supplies  1500 1500

Prepaid Insurance  2700 1125 1575

Equipment  45,000 45000

Account Payable  9000 9000

Service  Revenue 6000 1800 2600 6800

Notes Payable 20,000 20000

Owner’s Capital  22,000 22,000

Unearned Service 1800 1800

Revenue 

Sales revenue 52,100 52,100

Salaries Expenses  30,000 30000

Rent Expenses  1,500 1500

Supplies expense 3700 1500 5200

Advertising expense 1900 1900

Utility expense 1700 1700

Insurance Expense 1125 1125

Interest Expense 1200 1200

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Interest Payable 1200 1200

Depreciation Expense 2250 2250

Accumulated 2250 2250

Depreciation

1,09,10 1,09,100 10,475 10,475 1,16,650 1,16,650

0

2. Martin Company purchase a new van on October 1, 2019, at a cost of $ 145,000. The company
predicted that the van would have a salvage value of $ 25,000. The van is estimated to be used of
500,000 milage for 5 years life. (15m) 
Required: Calculate the depreciation expense by using the following methods for the
indicated year.  

(a) Straight- line method for 2019 

Answer (a)
Cost - Salvage value = Depreciable cost 
$145,000 - $25,000 = $120,000
Annual depreciation expense = Depreciable cost / Useful life (years)
Annual depreciation expense = 1,20,000 / 5
= $ 24,000

*Annual depreciation expense for 2019 = 24000 x 3/12

= $6000

The rate of Depreciation for Declining method= (100%/Number_of_expected_Years)

= (100%/5)
= 20%
Book Value= Original Asset Cost – Accumulated Depreciation
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= 145,000-6000
= 139,000
Illustration:
Yea Depreciation Rate Annual Accumulated Book
r cost Valu Expense* Depreciation Value
e
2019 $120,000 20% 6,000 6,000 139,000
    
(b) Units-of-activity for 2019, assuming machine usage was 80,000milages.  

Answer (b)

Depreciation cost per hour= Depreciable Cost / Total Units of Activity

= (145,000-25000) /5,00,000
= 1,20,000/500,000
= $0.24
Annual depreciation expense (2019)= depreciable cost per unit *units of activity during the year
= 0.24*80,000
= $19,200

Year Hours Used Rate per Annual Dep. Accumulated Book

Hour Expense* Depreciation Value*
2019 80,000 0.24 $19,200 $19,200 125,800

*Book Value= Original Asset Cost – Accumulated Depreciation

= 145,000-19,200
= 125,800

(c) Declining balance using double the straight-line rate for 2019 and 2020. 

Answer (c)

The rate of Depreciation for Declining method= (100%/Number_of_expected_Years)*2

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= (100%/5)*2
= 40%
Annual depreciation expense= book value at beginning of year* declining balance rate* time
period
Annual depreciation expense (2019) = 145,000* 40%* 3/12
= $ 14500
Annual depreciation expense (2020) = 130,500*40%
= $ 52,200
Year Beginning Declining Annual Expense Accumulated Book Value*
Book Value Balance Rate (With Calculation) Depreciation
2019 145,000 40% 14,500 14,500 130,500
2020 130,500 40% 52,200 66,700 78,300

*Book Value= Original Asset Cost – Accumulated Depreciation

In 2019 = (145000-14500)

In 2020 = (145000-66,700)