Q.

1 Prepare cash book for the Syed & company

2008 Description £
May
1 Balances brought down from April:
Cash balance 29
Bank balance 654
Debtors accounts:
B King 120
N Campbell 280
D Shand 40
Creditor Account:
U Borrow 60
A Allen 440
R Long 100
2 B King pays us by cheque, having deducted 21/2 per cent cash discount £3. 117
4 We pay R Long his account by cheque, deducting 5 per cent cash discount £5. 95
5 We withdrew £100 cash from the bank for business use. 100
7 N Campbell pays us his account by cheque, deducting 21/2 per cent discount £7. 273
9 We paid office expenses in cash. 92
11 D Shand pays us in cash after having deducted 5 per cent cash discount. 38
15 We pay U Barrow by cheque less 5 per cent cash discount £3. 57
16 We pay A Allen by cheque less 21/2 per cent cash discount £11. 429
18 Cash sales and directly pain into bank 432
22 Cash withdraw for personal use from business 123
23 Cash received from N Cambell 120
25 Cash deposited into bank 520
27 The following paid their accounts by cheque: G; £260; P; £320; T £420 1000

31 The sale incurred on credit 2000

Q.2 Based on Adjusted Trial Balance, prepare single and multiple step income statement as well as closing entries of the company.

Accounts Dr Cr Accounts Dr Cr
Cash $48,000 Long-term notes payable 190,000
Accounts receivable 110,000 J Hallam, Capital 115,000
Interest receivable 6,000 J Hallam, Withdrawals 40,000
Notes receivable (due
200,000 Delivery fees earned 580,000
in 90 days)
Office supplies 12,000 Interest earned 2,40,000
Trucks 124,000 Cost of goods sold 2,40,000
Accumulated Depreciation expense—
$48,000 46,000
depreciation—Trucks Equipment
Equipment 260,000 Salaries expense 64,000
Accumulated
depreciation— 190,000 Wages expense 290,000
Equipment
Land 90,000 Interest expense 25,000
Accounts payable 124,000 Office supplies expense 33,000
Interest payable 22,000 Advertising expense 26,400
Salaries payable 30,000 Repairs expense—Trucks 34,600
Unearned delivery fees 110,000 Totals $1,649,000 $1,649,000

Q.3
Accounts Dr Cr Accounts Dr Cr

101 Cash 4000 401 Professional fees earned 96,000

104 Short-term investments 22,000 406 Rent earned 13,000

126 Supplies 7,100 407 Dividends earned 1,900

128 Prepaid insurance 6,000 409 Interest earned 1,000

167 Equipment 39,000 606 Cost of goods sold 10,000

168 Accumulated depreciation—Equipment $20,000 612 Depreciation expense—Equipment 5,000

173 Building 130,000 623 Wages expense 31,000

174 Accumulated depreciation—Building 55,000 633 Interest expense 4,100

183 Land 45,000 637 Insurance expense 9,000

201 Accounts payable 15,500 640 Rent expense 12,400

203 Interest payable 1,500 652 Supplies expense 6,400

208 Rent payable 2,500 682 Postage expense 3,200

210 Wages payable 1,500 683 Property taxes expense 4,000

213 Property taxes payable 800 684 Repairs expense 7,900

233 Unearned professional fees 6,500 688 Telephone expense 2,200

251 Long-term notes payable 66,000 690 Utilities expense 3,600

301 J Sharp, Capital 82,700 Totals $363,900 $363,900

302 J Sharp, Withdrawals 12,000

Prepare income statement and balance sheet

Q.4
Prepare a bank reconciliation as well as journal entries of following events for Jamboree Enterprises for the month ended November 30, 2011. The
following information is available to reconcile Jamboree Enterprises’ book balance of cash with its bank statement balance as of November 30,
2011:
a. After all posting is complete on November 30, the company’s book balance of Cash has a $16,380 debit balance, but its bank statement shows a
$38,520 balance.
b. Checks No. 2024 for $4,810 and No. 2026 for $5,000 are outstanding.
c. In comparing the canceled checks on the bank statement with the entries in the accounting records, itis found that Check No. 2025 in payment of
rent is correctly drawn for $1,000 but is erroneously
entered in the accounting records as $880.

d. The November 30 deposit of $17,150 was placed in the night depository after banking hours on that date, and this amount does not appear on the
bank statement.
e. In reviewing the bank statement, a check written by Jumbo Enterprises in the amount of $160 was erroneously drawn against Jamboree’s
account.
f. A credit memorandum enclosed with the bank statement indicates that the bank collected a $30,000 note and $900 of related interest on
Jamboree’s behalf. This transaction was not recorded by Jamboree prior to receiving the statement.
g. A debit memorandum for $1,100 lists a $1,100 NSF check received from a customer, Marilyn Welch. Jamboree had not recorded the return of
this check before receiving the statement.
h. Bank service charges for November total $40. These charges were not recorded by Jamboree before receiving the statement.

Q.5
The following information is available to reconcile Style Co.’s book balance of cash with its bank statement cash balance as of December 31, 2011.
a. The December 31 cash balance according to the accounting records is $31,743.70, and the bank statement cash balance for that date is
$45,091.80.
b. Check No. 1273 for $1,084.20 and Check No. 1282 for $390, both written and entered in the accounting records in December, are not among the
canceled checks. Two checks, No. 1231 for $2,289 and
No. 1242 for $370.50, were outstanding on the most recent November 30 reconciliation. Check No. 1231
is listed with the December canceled checks, but Check No. 1242 is not.
c. When the December checks are compared with entries in the accounting records, it is found that
Check No. 1267 had been correctly drawn for $2,435 to pay for office supplies but was erroneously
entered in the accounting records as $2,453.
d. Two debit memoranda are enclosed with the statement and are unrecorded at the time of the reconciliation. One debit memorandum is for
$749.50 and dealt with an NSF check for $732 received from a
customer, Titus Industries, in payment of its account. The bank assessed a $17.50 fee for processing
it. The second debit memorandum is a $79 charge for check printing. Style did not record these transactions before receiving the statement.
e. A credit memorandum indicates that the bank collected $20,000 cash on a note receivable for the
company, deducted a $20 collection fee, and credited the balance to the company’s Cash account.
Style did not record this transaction before receiving the statement.
f. Style’s December 31 daily cash receipts of $7,666.10 were placed in the bank’s night depository on
that date, but do not appear on the December 31 bank statement.
Required
1. Prepare the bank reconciliation for this company as of December 31, 2011.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity
with the reconciled cash balance as of December 31, 2011.

Q.6

The following information is available to reconcile Clark Company’s book balance of cash with its bank
statement cash balance as of July 31, 2011.
a. On July 31, the company’s Cash account has a $26,193 debit balance, but its July bank statement
shows a $28,020 cash balance.
b. Check No. 3031 for $1,380 and Check No. 3040 for $552 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the
July canceled checks, but Check No. 3031 is not. Also,
Check No. 3065 for $336 and Check No. 3069 for $2,148, both written in July, are not among the
canceled checks on the July 31 statement.
c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it
is found that Check No. 3056 for July rent was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as
$1,230.
d. A credit memorandum enclosed with the July bank statement indicates the bank collected $9,000 cash
on a non-interest-bearing note for Clark, deducted a $45 collection fee, and credited the remainder to
its account. Clark had not recorded this event before receiving the statement.
e. A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been
received from a customer, Jim Shaw. Clark has not yet recorded this check as NSF.
f. Enclosed with the July statement is a $15 debit memorandum for bank services. It has not yet been
recorded because no previous notification had been received.
g. Clark’s July 31 daily cash receipts of $10,152 were placed in the bank’s night depository on that date,
but do not appear on the July 31 bank statement.
Required
1. Prepare the bank reconciliation for this company as of July 31, 2011.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity
with the reconciled cash balance as of July 31, 2011.

Q.7

Prepare Depreciation schedule for the following year

A fleet of refrigerated delivery trucks is acquired on January 5, 2011, at a cost of $930,000 with an estimated
useful life of eight years and an estimated salvage value of $150,000. Compute the depreciation expense for
the first three years using the double-declining-balance method, straight line method. For the unit of production
methods also find sum of digit of years’ depreciation methods. Total number of units of production are 3,12,0000 units,
as follows 1st year total produced units are 4,00,000 units, 2nd year are 3,90,000 units, 3rd year are 4,10,000 units, 4th year
are 4,20,000 units, 5th year are 3,80,0000 units, 6th year are 3,70,000 units, 7th year are 3,28,000 and at the 8th year are
4,22,0000.

Q.8

On January 2, Gannon Co. purchases and installs a new machine costing $312,000 with a five-year life and an estimated
$28,000 salvage value. Management estimates the machine will produce 1,136,000 units of product during its life. Actual
production of units is as follows: year 1, 245,600; year 2, 230,400; year 3, 227,000; year 4, 232,600; and year 5, 211,200.
The total number of units produced by the end of year 5 exceeds the original estimate—this difference was not predicted.
(The machine must not be depreciated below its estimated salvage value.)
Required
Prepare a table with the following column headings and compute depreciation for each year (and total
depreciation of all years combined) for the machine under each depreciation method (Straight line method, double
declining method and unit of production method, sum of digit method)

Q.9

Cosmo and Ellis began a partnership by investing $50,000 and $75,000, respectively. During its first year,
the partnership earned $165,000. Prepare calculations showing how the $165,000 income should be allo
cated to the partners under each of the following three separate plans for sharing income and loss: (1) the
partners failed to agree on a method to share income; (2) the partners agreed to share income and loss in
proportion to their initial investments (round amounts to the nearest dollar); and (3) the partners agreed to
share income by granting a $55,000 per year salary allowance to Cosmo, a $45,000 per year salary allow
ance to Ellis, 10% interest on their initial capital investments, and the remaining balance shared equally.
Assume that the partners of Exercise 12-5 agreed to share net income and loss by granting annual salary allowances of
$55,000 to Cosmo and $45,000 to Ellis, 10% interest allowances on their investments, and any remaining balance shared
equally.
1. Determine the partners’ shares of Cosmo and Ellis given a first-year net income of $94,400.
2. Determine the partners’ shares of Cosmo and Ellis given a first-year net loss of $15,700.

Q.10
Kroll Corporation reports the following components of stockholders’ equity on December 31, 2011.
In year 2012, the following transactions affected its stockholders’ equity accounts.
Jan. 2 Purchased 2,000 shares of its own stock at $25 cash per share.
Jan. 7 Directors declared a $2 per share cash dividend payable on Feb. 28 to the Feb. 9 stockholders of record.
Feb. 28 Paid the dividend declared on January 7.
July 9 Sold 500 of its treasury shares at $30 cash per share.
Aug. 27 Sold 1,500 of its treasury shares at $23 cash per share.
Sept. 9 Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders
of record.
Oct. 22 Paid the dividend declared on September 9.
Dec. 31 Closed the $8,000 credit balance (from net income) in the Income Summary account to Retained
Earnings.
Required
1. Prepare journal entries to record each of these transactions for 2012.
2. Prepare a statement of retained earnings for the year ended December 31, 2012.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2012.

Q.11

Barton Corporation began operations on January 1, 2010. The following transactions relating to stock holders’ equity
occurred in the first two years of the company’s operations.
2010
Jan. 1 Authorized the issuance of 2 million shares of $5 par value common stock and 100,000 shares of $100 par value,
20% cumulative, preferred stock.
Jan. 2 Issued 200,000 shares of common stock for $12 cash per share.
Jan. 3 Issued 100,000 shares of common stock in exchange for a building valued at $820,000 and merchandise inventory
valued at $380,000.
Jan. 4 Paid $10,000 cash to the company’s founders for organization activities.
Jan. 5 Issued 12,000 shares of preferred stock for $110 cash per share.
2011
June 4 Issued 100,000 shares of common stock for $15 cash per share.
Required
1. Prepare journal entries to record these transactions.
2. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2010, and December 31, 2011, based
on these transactions.
3. Prepare a table showing dividend allocations and dividends per share for 2010 and 2011 assuming Barton declares the
following cash dividends: 2010, $100,000, and 2011, $400,000.
4. Prepare the January 2, 2010, journal entry for Barton’s issuance of 200,000 shares of common stock for $12 cash per
share assuming a. Common stock is no-par stock without a stated value.
nd
b. Common stock is no-par stock with a stated value of $10 per share. Only for MBA 2
Q.12
The equity sections from Jetta Corporation’s 2011 and 2012 balance sheets follow:
 Stockholders’ Equity (December 31, 2011)
Common stock—$20 par value, 15,000 shares authorized,
8,500 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . $170,000
Paid-in capital in excess of par value, common stock . . . . . . . . . . . . . . 30,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $335,000
Stockholders’ Equity (December 31, 2012)
Common stock—$20 par value, 15,000 shares authorized,
9,500 shares issued, 500 shares in treasury . . . . . . . . . . . . . . . . . . . . $190,000
Paid-in capital in excess of par value, common stock . . . . . . . . . . . . . . 52,000
Retained earnings ($20,000 restricted by treasury stock) . . . . . . . . . . 147,600
389,600
Less cost of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,000)
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $369,600
The following transactions and events affected its equity during year 2012.
Feb. 15 Declared a $0.40 per share cash dividend, date of record five days later.
Mar. 2 Purchased treasury stock for cash.
May 15 Declared a $0.40 per share cash dividend, date of record five days later.
Aug. 15 Declared a $0.40 per share cash dividend, date of record five days later.
Oct. 4 Declared a 12.5% stock dividend when the stock’s market value is $42 per share.
Oct. 20 Issued the stock dividend that was declared on October 4.
Nov. 15 Declared a $0.40 per share cash dividend, date of record five days later.
Required
1. How many common shares are outstanding on each cash dividend date?
2. What is the total dollar amount for each of the four cash dividends?
3. What is the amount of the capitalization of retained earnings for the stock dividend?
4. What is the per share cost of the treasury stock purchased?
5. How much net income did the company earn during year 2012?
Q.13
Water Sports Company (WSC) patented and successfully test-marketed a new product. To expand its ability to produce and market the new product,
WSC needs to raise $800,000 of financing. On January 1, 2011, the company obtained the money in two ways:
a. WSC signed a $400,000, 10% installment note to be repaid with five equal annual installments to be made on December 31 of 2011 through 2015.
b. WSC issued five-year bonds with a par value of $400,000. The bonds have a 12% annual contract rate and pay interest on June 30 and December
31. The bonds’ annual market rate is 10% as of January 1, 2011.
1. For the installment note, (a) compute the size of each annual payment, ( b) prepare an amortization
table such as Exhibit 14.14, and (c) prepare the journal entry for the first payment.
2. For the bonds, (a) compute their issue price; (b) prepare the January 1, 2011, journal entry to record
their issuance;
Q.14
Metro Company issues bonds with a par value of $75,000 on their stated issue date. The bonds mature in five years and pay
10% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 8%. Prepare
amortization schedule and find the issue price of bond with passing journal entry of issuance.

Q.15
The following information is available to reconcile Clark Company’s book balance of cash with its bank
statement cash balance as of July 31, 2011.
a. On July 31, the company’s Cash account has a $26,193 debit balance, but its July bank statement
shows a $28,020 cash balance.
b. Check No. 3031 for $1,380 and Check No. 3040 for $552 were outstanding on the June 30 bank
reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also,
Check No. 3065 for $336 and Check No. 3069 for $2,148, both written in July, are not among the
canceled checks on the July 31 statement.
c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it
is found that Check No. 3056 for July rent was correctly written and drawn for $1,250 but was
erroneously entered in the accounting records as $1,230.d. A credit memorandum enclosed with the July bank statement
indicates the bank collected $9,000 cash
on a non-interest-bearing note for Clark, deducted a $45 collection fee, and credited the remainder to
its account. Clark had not recorded this event before receiving the statement.
e. A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been
received from a customer, Jim Shaw. Clark has not yet recorded this check as NSF.
f. Enclosed with the July statement is a $15 debit memorandum for bank services. It has not yet been
recorded because no previous notification had been received.
g. Clark’s July 31 daily cash receipts of $10,152 were placed in the bank’s night depository on that date,
but do not appear on the July 31 bank statement.
Reconciled balance, $34,308
Q.16
The following information is available to reconcile Style Co.’s book balance of cash with its bank state
ment cash balance as of December 31, 2011. a. The December 31 cash balance according to the accounting
records is $31,743.70, and the bank statement cash balance for that date is $45,091.80.
b. Check No. 1273 for $1,084.20 and Check No. 1282 for $390, both written and entered in the accounting
records in December, are not among the canceled checks. Two checks, No. 1231 for $2,289 and No. 1242
for $370.50, were outstanding on the most recent November 30 reconciliation. Check No. 1231 is listed
with the December canceled checks, but Check No. 1242 is not.
c. When the December checks are compared with entries in the accounting records, it is found that
Check No. 1267 had been correctly drawn for $2,435 to pay for office supplies but was erroneously entered
in the accounting records as $2,453.
d. Two debit memoranda are enclosed with the statement and are unrecorded at the time of the reconcileation. One debit
memorandum is for $749.50 and dealt with an NSF check for $732 received from a
customer, Titus Industries, in payment of its account. The bank assessed a $17.50 fee for processing it. The
second debit memorandum is a $79 charge for check printing. Style did not record these trans actions before
receiving the statement.
e. A credit memorandum indicates that the bank collected $20,000 cash on a note receivable for the
company, deducted a $20 collection fee, and credited the balance to the company’s Cash account. Style did
not record this transaction before receiving the statement.
f. Style’s December 31 daily cash receipts of $7,666.10 were placed in the bank’s night depository on that
date, but do not appear on the December 31 bank statement.
(1) Reconciled balance, $50,913.20;
Q.17
The following six-column table for Solutions Co. includes the unadjusted trial balance as of
December 31, 2011. Required: Pass the adjusting entries and prepare adjusted trial
balance as well as income statement and balance sheet:
Account Title Dr. Cr.
Cash $9,000
Accounts receivable 0
Supplies 6,600
Machinery 40,100
Accumulated depreciation—Machinery $15,800
Interest payable 0
Salaries payable 0
Unearned rental fees 5,200
Notes payable 20,000
G. Clay, Capital 13,200
G. Clay, Withdrawals 10,500
 Rental fees earned 37,000
Depreciation expense—Machinery 0
Salaries expense 23,500
Interest expense 1,500
Supplies expense 0
Totals $91,200 $91,200

1. Complete the ten-column table by entering adjustments that reflect the following
information:
a. As of December 31, 2011, employees had earned $420 of unpaid and unrecorded wages.
b. The cost of supplies still available at December 31, 2011, is $2,450.
d. Analysis of the unearned rental fees shows that $3,100 remains unearned at December
31, 2011. f. Depreciation expense for the year is $3,800
Q.18
After several months of planning, Jasmine Worthy started a haircutting business called
Expressions. The following events occurred during its first month of business.
a. On August 1, Worthy invested $3,000 cash and $15,000 of equipment in Expressions.
b. On August 2, Expressions paid $600 cash for furniture for the shop.
c. On August 3, Expressions paid $500 cash to rent space in a strip mall for August.
d. On August 4, it purchased $1,200 of equipment on credit for the shop (using a long-term
note payable).
e. On August 5, Cash received from haircutting services in the first week $825.
f. On August 15, it provided $100 of haircutting services on account.
Required: Pass the General Entries, T Account and trial balance accounting equation of the
following events.
Q.19
On March 1, 2011, Ulfat and Abbas formed a partnership. Ulfat contributed $80,000 cash
and Abbas contributed Cash valued at $70,000 and an equipment valued at $100,000. The
partnership also assumed responsibility for Abbas’s $65,000 long-term note payable
associated with the equipment. The partners agreed to share income as follows: Ulfat is to
receive an annual salary allowance of $14,000, and Abbas $16000, both are to receive an
annual interest on capital at the rate of 8% of their beginning-year capital investment, and
any remaining income or loss between Ulfat and Abbas is to be shared 3:5 respectively. On
October 20, 2011, Ulfat withdrew $12,000 cash and Abbas withdrew $15,000 cash. After the
adjusting and closing entries are made to the revenue and expense accounts at December
31, 2011, the net income balance of the year is $83,000.
Required:
1. Prepare journal entries to record (a) the partners’ initial capital investments, (b) their cash withdrawals, and (c)
the December 31 closing of both the Withdrawals and Income Summary accounts.
2. Determine the balances of the partners’ capital accounts as of December 31, 2011.