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Chapter-3: Practical Problems

1) The company recorded adjusting entries for prepaid insurance, depreciation on equipment, interest on a note payable, and unearned revenue from customers who prepaid for future services. 2) The company recorded adjusting entries for prepaid insurance, depreciation on office equipment, accrued salaries, and unearned revenue from customers as well as an accrued utility bill and unrecorded service revenue. 3) The company recorded adjusting entries for depreciation expense on equipment, prepaid rent, supplies, accrued salaries and interest, unearned rent revenue, and unrecorded service and rent revenues.

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418 views

Chapter-3: Practical Problems

1) The company recorded adjusting entries for prepaid insurance, depreciation on equipment, interest on a note payable, and unearned revenue from customers who prepaid for future services. 2) The company recorded adjusting entries for prepaid insurance, depreciation on office equipment, accrued salaries, and unearned revenue from customers as well as an accrued utility bill and unrecorded service revenue. 3) The company recorded adjusting entries for depreciation expense on equipment, prepaid rent, supplies, accrued salaries and interest, unearned rent revenue, and unrecorded service and rent revenues.

Uploaded by

Md. Rokon Khan
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter-3

Practical Problems
Problem: 1 Shamim Ahmed opens the Go Green Lawn Company on April 1, 2015. At
April 30, the trial balance shows the following balances for selected accounts-

Particulars Tk.
Prepaid insurance 3600
Equipment 28000
Notes payable 20000
Unearned revenue 4200
Service Revenue 1800
Analysis reveals the following additional data:
1. Prepaid insurance is the cost of a 2 year insurance policy, effective April 1.
2. Depreciation on the equipment is tk. 500 per month.
3. The notes payable is dated April 1. It is a 6 months, 12% note.
4. Seven customers paid for the company’s 6 months’ lawn services package of tk. 600
beginning in April. The company performed services for these customers in April.
5. Lawn services provided other customers but not recorded at April 30 totaled Tk. 1500.
Required:
Prepare the adjusting entries for the month of April. (Show computation)

Problem 2: Tony Khan started his own consulting firm, Khan Academy, on June 1, 2010.
The trial balance at June 30 is shown below-

Khan Academy
Trial Balance
As on June 30, 2010
Particulars Dr.(Tk.) Cr.(Tk.)
Cash 7150
Accounts Receivable 6000
Supplies 2000
Prepaid Insurance 3000
Office Equipment 15000
Accounts payable 4500
Unearned Service Revenue 4000
Khan, Capital 21750
Service revenue 7900
Salaries expense 4000
Rent expense 1000
Total 38150 38150
Additional Data:
1. Supplies on hand at June 30 are Tk. 600
2. A utility bill for Tk. 150 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. Tk. 2500 of unearned service revenue has been earned at the end of the month.
5. Salaries of Tk. 2000 are accrued at June 30.
6. The office equipment is being depreciated at Tk. 250 per month for 60 months.
7. Invoice representing Tk. 1000 of service performed during the month have not been
recorded as of June 30.

Required:
Prepare the adjusting entries for the month of June. (Show computation)

Problem: 3
Alena Co. was organized on July 1, 2017. Quarterly financial statements are prepared. The
unadjusted and adjusted trial balances as of September 30 are shown below-
ALENA CO.
Trial Balance
September 30, 2017

Trial Balance Adjusted Trial Balance


Accounts Titles Debit (Tk.) Credit (Tk.) Debit (Tk.) Credit (Tk.)
Cash 8700 8700
Accounts Receivable 10400 11500
Supplies 1500 650
Prepaid Rent 2200 500
Equipment 18000 18000
Accu. Depreciation—Equipment 0 700
Notes Payable 10000 10000
Accounts Payable 2500 2500
Salaries and Wages Payable 0 725
Interest Payable 0 100
Unearned Rent Revenue 1900 450
Owner’s Capital 22000 22000
Owner’s Drawings 1600 1600
Service Revenue 16000 17100
Rent Revenue 1410 2860
Salaries and Wages Expense 8000 8725
Rent Expenses 1900 3600
Depreciation Expense 0 700
Supplies Expense 0 850
Utilities Expense 1510 1510
Interest Expense 0 100
Totals 53810 53810 56435 56435
Instructions:
a) Journalize the adjusting entries that were made.
b) Prepare an income statement and an owner’s equity statement for the 3 months ending
September 30 and a balance sheet at September 30.

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