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2014
Compiled and Solved by:
Sameer Hussain
B.COM – I – ACCOUNTING
REGULAR
Compiled & Solved by: Sameer Hussain www.a4accounting.weebly.com
B . C o m – I – A c c o u n t i n g – 2 0 1 4 ( R e g u l a r )
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ACCOUNTING – 2014
REGULAR Instructions: (1) Attempt any FIVE questions. (2) All questions carry equal marks. (3) Use of calculator is allowed. Do not use abbreviations. (4) Answers without necessary computations will not be accepted. (5) All journal entries should be properly dated, intended and narrated. Q.No.1 BALANCE SHEET, ADJUSTING AND CLOSING ENTRIES (a) The following are adjusted balances of Tariq & Company on December 31, 2013:
DEBIT BALANCES CREDIT BALANCES
Cash Rs.35,000 Accounts payable Rs.20,000
Merchandise inventory – January 1 20,000 Unearned rent 15,000
Other assets 60,000 Tariq Capital 70,000
Sales return and allowances 15,000 Sales 200,000
Sales discount 5,000 Purchase return and allowances 16,000
Purchases 150,000 Purchase discount 4,000
Transportation – in 10,000 Commission income 5,000
Salaries expenses 25,000
Insurance expenses 10,000
Total 330,000 Total 330,000
Merchandise inventory on December 31, 2013 was valued at Rs.30,000 REQUIRED Prepare closing entries in General Journal and balance sheet as on December 31, 2013. (b) The following are selected balances taken from the ledger of Naeem & Company on December 31, 2013:
Debit Credit
Accounts receivable Rs.80,000
Allowance for bad debts 2,000
Prepaid insurance 9,000
Prepaid rent 20,000
Accrued salary Rs.12,000
Commission income 15,000
Data for Adjustment on December 31, 2013: (1) Allowance for bad debts is estimated at 2% of the year-end balance of accounts receivable. (2) Insurance expired for the year Rs.9,000. (3) Accrued salaries amounted to Rs.15,000. (4) Prepaid rent on December 31, 2013 was nil. (5) Commission income for the period Rs.19,000.
REQUIRED Prepare adjusting entries in General Journal.
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SOLUTION 1 (a) TARIQ & COMPANY CLOSING ENTRIES
FOR THE PERIOD ENDED 31 DECEMBER 2013
Date Particulars P/R Debit Credit
1 Expense and revenue summary 235,000 Merchandise inventory (Beg) 20,000 Sales return and allowances 15,000 Sales discount 5,000 Purchases 150,000 Transportation in 10,000 Salaries expense 25,000 Insurance expense 10,000 (To close the various expense account)
2 Sales 200,000 Purchases return and allowances 16,000 Purchase discount 4,000 Commission income 5,000 Merchandise inventory (ending) 30,000 Expense and revenue summary 255,000 (To close the various income accounts)
3 Expense and revenue summary 20,000 Capital 20,000 (To close the expense and revenue summary account)
TARIQ & COMPANY
BALANCE SHEET AS ON 31 DECEMBER 2013
ASSETS EQUITIES
Cash 35,000 Liabilities: Merchandise inventory 30,000 Accounts payable 20,000 Other assets 60,000 Unearned rent 15,000
Total liabilities 35,000 Owner’s Equity: Capital 70,000 Add: Net profit 20,000
Total owner’s equity 90,000
Total assets 125,000 Total equities 125,000
SOLUTION 1 (b)
NAEEM & COMPANY ADJUSTING ENTRIES
FOR THE PERIOD ENDED 31 DECEMBER 2013
Date Particulars P/R Debit Credit
1 Bad debts expense (80,000 x 2% + 2,000) 3,600 Allowance for bad debts 3,600 (To adjust the bad debts expense)
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Date Particulars P/R Debit Credit
2 Insurance expense 9,000 Prepaid insurance 9,000 (To adjust the unexpired insurance)
3 Salaries expense 3,000 Accrued salaries 3,000 (To adjust the unpaid salaries)
4 Rent expense 20,000 Prepaid rent 20,000 (To adjust the prepaid rent)
5 Commission receivable 4,000 Commission income 4,000 (To adjust the accrued commission income)
Q.No.2 CASH CONTROL (a) A voucher system is used by Sana Corporation. A few of the transactions are presented below:
1) Purchase furniture Rs.60,000 paying Rs.25,000 and signing a note for the balance. 2) Issued a 10%, 30-day note of Rs.50,000 and paid Rs.25,000 in settlement of a voucher payable
Rs.72,000. 3) Issued a 12%, 60-day note in settlement of an outstanding voucher for Rs.22,000. 4) Prepared voucher for Rs.45,000 payable to Asim & Company for merchandise purchased.
REQUIRED Using General Journal forms, record the above transactions in voucher register, cheque register and General Journal. (b) On comparison of cash book entries with those of the bank statement of Nazir & Company on January 6, 2015, the following differences were found:
1) Cash book balance Rs.31,800. 2) Bank statement balance Rs.9,400. 3) Cheque for Rs.9,500 deposited into bank was wrongly entered in bank statement as for Rs.5,900. 4) A cheque for Rs.8,000 issued in settlement of accounts payable was erroneously entered in cash
book as for Rs.3,000. 5) Nazir & Company had an error in recording a payment to supplier Rs.13,500 whilst the cheque
was issued for correct amount of Rs.15,300. 6) Cheque deposited on January 6, but not shown on bank statement Rs.12,000.
REQUIRED Prepare bank reconciliation statement on January 6, 2015. SOLUTION 2 (a)
SANA CORPORATION VOUCHER REGISTER
Date Particulars P/R Debit Credit
1 Furniture 60,000 Voucher payable 25,000 Voucher payable 35,000 (To record the voucher prepared for purchase of
furniture)
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Date Particulars P/R Debit Credit
2 Voucher payable 72,000 Interest expense 3,000 Voucher payable 50,000 Voucher payable 25,000 (To record the voucher prepared in settlement of voucher
payable)
3 No entry
4 Purchases 45,000 Voucher payable 45,000 (To record the voucher prepared for purchase of goods)
SANA CORPORATION
CHEQUE REGISTER
Date Particulars P/R Debit Credit
1 Voucher payable 25,000 Bank 25,000 (To record the payment for purchase of furniture)
2 Voucher payable 25,000 Bank 25,000 (To record the payment of outstanding voucher)
3 No entry
4 No entry
SANA CORPORATION GENERAL JOURNAL
Date Particulars P/R Debit Credit
1 Voucher payable 35,000 Notes payable 35,000 (To record the note issued for purchase of furniture)
2 Voucher payable 50,000 10% Notes payable 50,000 (To record the note issued for voucher payable)
3 Voucher payable 22,000 12% Notes payable 22,000 (To record the note issued for outstanding voucher)
4 No entry
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SOLUTION 2 (b) NAZIR & COMPANY
BANK RECONCILIATION STATEMENT FOR THE MONTH JANUARY 6, 2015
Particulars Cash Book Pass Book
Balance on January 6, 2015 31,800 9,400 Ad: Error by bank (3) 3,600 Less: Accounts payable – Error (4) (5,000) Less: Accounts payable – Error (5) (1,800) Add: Last day deposit 12,000
Reconcile balance 25,000 25,000
Q.No.3 INVENTORY VALUATION (a) The following data relate to the business of Shahab & Co. which uses periodic inventory system: November 1: Beginning inventory 2,000 units @ Rs.12. November 12: Purchases 4,000 units @ Rs.14. November 18: Purchases 10,000 units @ Rs.18. November 22: Purchases 8,000 units @ Rs.22. November 29: Purchases 5,000 units @ Rs.? November 30: Ending inventory 7,000 units. Cost of goods sold Rs.438,000. Company uses the LIFO method. REQUIRED Determine: (i) Cost of ending units. (ii) Unit cost and total cost of November 29 purchases. (b): Shahzad & Co. deals in computer and uses perpetual inventory system. The record of the company show the following transactions for the month of October, 2014: October 5: Purchased 30 computers @ Rs.10,000. October 22: Purchased 20 computers @ Rs.12,000. October 25: Purchased 25 computers @ Rs.11,000. October 28: Sold 40 computers @ Rs.15,000 on credit. REQUIRED Compute the cost of goods sold and gross profit of 40 computers under FIFO method. SOLUTION 3 (a) Computation of Cost of Ending Inventory:
Date Particulars Units Unit Cost Total Cost
November 01 Beginning inventory 2,000 Rs.12 Rs.24,000 November 12 Purchases 4,000 Rs.14 Rs.56,000 November 18 Purchases 1,000 Rs.18 Rs.18,000
Cost of ending inventory 7,000 Rs.98,000
Computation of Total Cost of November 29 Purchases: Cost of goods sold Rs.438,000 Add: Cost of ending inventory 98,000
Merchandise available for sale 536,000 Less: Cost of beginning inventory (2,000 x 12) (24,000)
Total purchases 512,000 Less: Purchases Except November 29:
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November 12: Purchases (4,000 x 14) 56,000 November 18: Purchases (10,000 x 18) 180,000 November 22: Purchases (8,000 x 22) 176,000
Total purchases except November 29 (412,000)
Cost of November 29 purchases Rs.100,000
Computation of Unit Cost of November 29 Purchases:
Unit cost = Purchases
Number of units purchased
Unit cost = 100,000
5,000 Unit cost = Rs.20 per unit SOLUTION 3 (b)
SHAHZAD & CO. INVENTORY VALUATION
PERPETUAL INVENTORY SYSTEM FIFO METHOD
FOR THE MONTH OF OCTOBER 2014
Date Purchases/Received Sales/Issued Balance
Units Unit cost
Total cost
Units Unit cost
Total cost
Units Unit cost
Total cost
Oct. 5 30 10,000 300,000 30 10,000 300,000
Oct. 22 20 12,000 240,000 30 10,000 300,000 20 12,000 240,000
Oct. 25 25 11,000 275,000 30 10,000 300,000 20 12,000 240,000 25 11,000 275,000
Oct. 28 30 10,000 300,000 10 12,000 120,000 10 12,000 120,000 25 11,000 275,000
75 815,000 40 420,000 35 395,000
Computation of Total Purchases:
30 Units @ Rs.10,000 each 300,000 20 Units @ Rs.12,000 each 240,000 25 Units @ Rs.11,000 each 275,000
75 Total purchases Rs.815,000
Computation of Cost of Goods Sold: Total purchases/goods available for sale 815,000 Less: Merchandise inventory (ending) (395,000)
Cost of goods sold Rs.420,000
Computation of Gross Profit: Sales (40 x 15,000) 600,000 Less: Cost of goods sold (420,000)
Gross profit Rs.180,000
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Q.No.4 VALUATION OF ACCOUNTS RECEIVABLE Following is the list of accounts receivable for Zeenat & Co. at December 31, 2013:
Transaction Date Customer Amount Due
January, 30 Shiraz Store Rs.5,000
July, 20 Badar & Co. 20,000
September, 15 Faizan Store 32,000
October, 27 Kamil & Co. 9,000
November, 10 Saleem & Sons 40,000
November, 12 Akbar Store 120,000
December, 10 Arif Sons 80,000
December, 28 Nazir & Co. 60,000
REQUIRED (a) Prepare a schedule to compute the estimated portion of each group that will prove uncollectible
and the required balance in the allowance for doubtful accounts. The following percentages of each group are estimated to be uncollectible 1 – 30 days, 2%; 31 – 60 days, 4%; 61 – 120 days, 10%; Over 120 days, 20%.
(b) Prepare the journal entry to bring the allowances for doubtful accounts up to its required balance at December 31, 2013. Prior to making the adjustment, the account has debit balance of Rs.1,650.
SOLUTION 4 (a) Aging Schedule:
Group Shiraz Store
Badar & Co.
Faizan Store
Kamil & Co.
Saleem & Sons
Akbar Store
Arif Sons
Nazir & Co.
Total
1-30 days 80,000 60,000 140,000 31-60 days 40,000 120,000 160,000 61-120 days 32,000 9,000 41,000 Over 120 days 5,000 20,000 25,000
Total 366,000
Computation of Uncollectible Amount:
Group Amount Rate Uncollectible
Amount
1 – 30 days 140,000 2% 2,800 31 – 60 days 160,000 4% 6,400 61 – 120 days 41,000 10% 4,100 Over 120 days 25,000 20% 5,000
Total uncollectible Rs.366,000 Rs.18,300
Computation of Bad Debts Expense: Allowance for doubtful account (adjusted) 18,300 Add: Allowance for doubtful account (unadjusted) 1,650
Bad debts expense Rs.19,950
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SOLUTION 4 (b) ZEENAT & CO.
GENERAL JOURNAL
Date Particulars P/R Debit Credit
Dec. 31 Bad debts expense 19,950 2013 Allowance for doubtful accounts 19,950 (To adjust the allowance for doubtful accounts)
Q.No.5 DEPRECIATION The following selected transactions were completed by Danish & Co.:
1) Beginning balance of Machine A (1-1-12) Rs.220,000 and allowances for depreciation Machine A (1-1-12) Rs.80,000. Assume that the company uses the Diminishing Balance method @ 20% on reduced balance every year.
2) Company purchased Machine B for Rs.200,000 on May 1, 2012. The company’s policy is to use machine 8 hours per day and charge depreciation expense at Rs.5 per hour. The machine is operated during the year 2012 for only 160 days and operated in year 2013 for only 220 days.
3) Company purchased Machine C on April 1, 2012 for Rs.260,000. Estimated life 15 years and its scrap value was Rs.20,000. The company uses sum of the year’s digit method.
4) Company purchased Machine D on September 1, 2012 for Rs.200,000. Its scrap value was estimated at Rs.20,000 and useful life 20 years. The company uses straight line method.
REQUIRED (1) Compute the depreciation expense of each machine separately for the year ended December
31, 2012 and 2013. (2) Pass journal entries to record the depreciation expense for the year ended on December 31,
2013 for each machine. SOLUTION 5 (i) Computation of Depreciation Expense by Diminishing Balance Method (Machine – A): Annual depreciation = Cost/Book value x Rate (%) Book value = Cost – Allowance for depreciation
Year Book Value
Rate Depreciation Expense
Allowance for Depreciation Book Value
2012 140,000 20% 28,000 80,000 + 28,000 = 108,000 220,000 – 108,000 = 112,000
2013 112,000 20% 22,400 108,000 + 22,400 = 130,400 220,000 – 130,400 = 89,600
Computation of Depreciation Expense by Working Hours Method (Machine – B): Annual depreciation = Hours worked x Rate per hour Depreciation expense for December 31, 2012 = 160 x 8 x 5 = 6,400 Depreciation expense for December 31, 2013 = 220 x 8 x 5 = 8,800 Computation of Depreciation Expense by Sum of the Year’s Digit Method (Machine – C): Annual depreciation = Cost – Salvage value (Depreciable cost) x Yearly fraction Fraction = n (n + 1) 2 Fraction = 15 (15 +1) 2 Fraction = 120
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Depreciable cost = Cost – Salvage value Depreciable cost = 260,000 – 20,000 Depreciable cost = Rs.240,000
Year Depreciable Cost
Yearly Fraction
Depreciation expense
2012 240,000 15/120 30,000 x 9/12 = 22,500 22,500
2013 240,000 15/120 30,000 x 3/12 = 7,500 7,500 + 21,000 = 2013 240,000 14/120 28,000 x 9/12 = 21,000 28,500
Computation of Depreciation Expense by Straight Line Method (Machine – D): Annual depreciation = Cost – Scrap value Estimated life in years Annual depreciation = 200,000 – 20,000 20 Annual depreciation = 9,000 Depreciation expense for the period 31 December 2012 = 9,000 x 4/12 = 3,000 Depreciation expense for the period 31 December 2013 = 9,000 SOLUTION 5 (ii)
DANISH & CO. GENERAL JOURNAL
Date Particulars P/R Debit Credit
Dec. 31 Depreciation expense 22,400 2013 Allowance for depreciation (Machine – A) 22,400 (To record the depreciation on machine A)
Dec. 31 Depreciation expense 8,800 2013 Allowance for depreciation (Machine – B) 8,800 (To record the depreciation on machine B)
Dec. 31 Depreciation expense 28,500 2013 Allowance for depreciation (Machine – C) 28,500 (To record the depreciation on machine C)
Dec. 31 Depreciation expense 9,000 2013 Allowance for depreciation (Machine – D) 9,000 (To record the depreciation on machine D)
Q.No.6 PARTNERSHIP – FORMATION AND LIQUIDATION (a) Aslam and Akmal were doing separate businesses. On May 5, 2014, they decided to form a partnership by merging their business. On this date, their balance sheet was as under: Aslam Akmal Cash Rs.40,000 Rs.60,000 Other assets 200,000 240,000 Accounts payable 50,000 80,000 The assets and liabilities were taken at the book value in the new partnership. Aslam and Akmal decided that each partner’s capital in the new partnership will be Rs.210,000. They contributed the deficiency, if any, from their private fund. REQUIRED Prepare journal entries to record formation of partnership firm.
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(b) Aziz, Bilal and Chand decided to liquidate the partnership on January 1, 2014. Just before liquidation, following balances appeared in the balance sheet: Cash Rs.200,000; Goodwill Rs.100,000; Other assets Rs.700,000; Liabilities Rs.200,000; Aziz Capital Rs.160,000; Bilal Capital Rs.220,000; Chand Capital Rs.420,000. They share profit and losses in the ratio of 2:2:1 respectively. Other assets realized Rs.500,000. Liabilities were paid. All partners are personally solvent. REQUIRED Give General Journal entries relating liquidation and final settlement of partners. SOLUTION 6 (a)
_________ PARTNERSHIP GENERAL JOURNAL
Date Particulars P/R Debit Credit
(a) Cash 40,000 Other assets 200,000 Accounts payable 50,000 Aslam Capital 190,000 (To record the investment by Aslam)
(b) Cash 60,000 Other assets 240,000 Accounts payable 80,000 Akmal Capital 220,000 (To record the investment by Akmal)
(c) Cash 20,000 Aslam Capital 20,000 (To record the additional cash contributed by Aslam)
(d) Akmal Capital 10,000 Cash 10,000 (To record the excess cash withdrew by Akmal)
SOLUTION 6 (b)
_________ PARTNERSHIP GENERAL JOURNAL
Date Particulars P/R Debit Credit
(a) Cash 500,000 Realization 200,000 Other assets 700,000 (To record the sale of other assets on loss)
(b) Aziz Capital (100,000 x 2/5) 40,000 Bilal Capital (100,000 x 2/5) 40,000 Chand Capital (100,000 x1/5) 20,000 Goodwill 100,000 (To close the goodwill account)
(c) Liabilities 200,000 Cash 200,000 (To record the payment of liabilities)
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Date Particulars P/R Debit Credit
(d) Aziz Capital (200,000 x 2/5) 80,000 Bilal Capital (200,000 x 2/5) 80,000 Chand Capital (200,000 x1/5) 40,000 Realization 200,000 (To record the distribution of loss on realization)
(e) Aziz Capital (160,000 – 40,000 – 80,000) 40,000 Bilal Capital (220,000 – 40,000 – 80,000) 100,000 Chand Capital (420,000 – 20,000 – 40,000) 360,000 Cash (200,000 + 500,000 – 200,000) 500,000 (To record the distribution of remaining cash)
Q.No.7 PARTNERSHIP – ADMISSION Abid and Shahid are partners with capital balance Rs.120,000 and Rs.180,000 respectively sharing profit and losses in the ratio 1:2. They admit Khalid. REQUIRED Give General Journal entries to record the admission of Khalid in each of the following situations considered separately: Situation A – Khalid invests sufficient cash to give him 1/3 interest in the firm. Situation B – Khalid invests Rs.120,000 for 1/3 interest. Abid and Shahid do not reduce their capital. Situation C – Khalid invests Rs.180,000 for 1/3 interest in the firm. His capital account is to be
credited with the entire amount of his investment. Situation D – Khalid invests Rs.120,000 for 1/4 interest. (Bonus to be recorded). SOLUTION 7 Case – A: Computation of Sufficient Cash: For 2/3 interest, old partners’ capital (120,000 + 180,000) 300,000
Therefore total capital of firm (300,000 x 3/2) 450,000
For 1/3 interest, Khalid Capital (450,000 x 1/3) 150,000
________ PARTNERSHIP
GENERAL JOURNAL
Date Particulars P/R Debit Credit
1 Cash 150,000 Khalid Capital 150,000 (To record the admission of Khalid)
Case – B: Computation of Goodwill (Goodwill to New Partner): For 2/3 interest, old partners’ capital (120,000 + 180,000) 300,000
Therefore total capital of firm (300,000 x 3/2) 450,000
For 1/3 interest, Khalid Capital (450,000 x 1/3) 150,000 Less: Khalid’s investment (120,000)
Goodwill to Khalid 30,000
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________ PARTNERSHIP GENERAL JOURNAL
Date Particulars P/R Debit Credit
1 Cash 120,000 Goodwill 30,000 Khalid Capital 150,000 (To record the admission of Khalid)
Case – C: Computation of Goodwill (Goodwill to Old Partners): For 1/3 interest, Khalid’s investment 180,000
Therefore total capital of firm (180,000 x 3) 540,000
For 2/3 interest, old partners’ capital (540,000 x 2/3) 360,000 Less: Old partners’ capital before admission (120,000 + 180,000) (300,000)
Goodwill to old partners 60,000
________ PARTNERSHIP
GENERAL JOURNAL
Date Particulars P/R Debit Credit
1 Cash 180,000 Khalid Capital 180,000 (To record the admission of Khalid)
2 Goodwill 60,000 Abid Capital (60,000 x 1/3) 20,000 Shahid Capital (60,000 x 2/3) 40,000 (To record the distribution of goodwill)
Case – D: Computation of Bonus: Old partners’ capital (120,000 + 180,000) 300,000 Add: Khalid’s investment 120,000
Total capital of firm 420,000
For 1/4 interest Khalid’s capital (420,000 x 1/4) 105,000 Less: Khalid’s investment (120,000)
Bonus to old partners 15,000
________ PARTNERSHIP
GENERAL JOURNAL
Date Particulars P/R Debit Credit
1 Cash 120,000 Abid Capital (15,000 x 1/3) 5,000 Shahid Capital (15,000 x 2/3) 10,000 Khalid Capital 105,000 (To record the admission of Khalid)
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Q.No.8 MISCELLANEOUS The following selected transactions related to Nafees & Co.:
1) An equipment costing Rs.80,000 was traded – in with new equipment having a list price of Rs.100,000, receiving a trade – in – allowance of Rs.40,000. The book value of old equipment on the date of exchange was Rs.50,000.
2) Sold for Rs.400,000 half portion of land costing Rs.250,000. Received according to term of sales Rs.300,000 in cash, a 10%, 4 month note for the balance.
3) Purchased 1,500 units of merchandise on credit @ Rs.20 each. (Company uses periodic inventory system).
4) Sold 1,000 units of merchandise costing Rs.30 each on account @ Rs.40 each. (Company uses perpetual inventory system).
5) A previously written off account of Rs.20,000 was subsequently recovered to the extent of Rs.12,000.
6) End of the period analysis of accounts receivable subsidiary ledger revealed one of the customer’s account showing credit balance of Rs.15,000.
7) Unpaid salary amounted to Rs.18,000. 8) Commission earned but not received Rs.20,000.
REQUIRED Record the above transactions in General Journal. SOLUTION 8
NAFEES & CO. GENERAL JOURNAL
Date Particulars P/R Debit Credit
1 Equipment (New) 100,000 Allowance for depreciation 30,000 Loss on exchange 10,000 Cash 60,000 Equipment (Old) 80,000 (To record the exchange of equipment)
2 Cash 300,000 10% Notes receivable 100,000 Gain on sale of land 150,000 Land 250,000 (To record the sale of land on gain)
3 Purchases (1,500 x 20) 30,000 Accounts payable 30,000 (To record the purchase of goods on credit)
4 (a) Accounts receivable (1,000 x 40) 40,000 Sales 40,000 (To record the sale of goods on account)
4 (b) Cost of goods sold (1,000 x 30) 30,000 Merchandise 30,000 (To record the cost of goods sold)
5 (a) Accounts receivable 12,000 Allowance for bad debts 12,000 (To record the recovery of written off account)
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Date Particulars P/R Debit Credit
5 (b) Cash 12,000 Accounts receivable 12,000 (To record the cash collected from customer)
6 Accounts receivable 15,000 Advanced from customer 15,000 (To record the advance from customer)
7 Salaries expense 18,000 Salaries payable 18,000 (To record the unpaid salaries)
8 Commission receivable 20,000 Commission income 20,000 (To record the accrued commission income)
Computation of Gain or Loss on Exchange: Cost of old equipment 80,000 Less: allowance for depreciation upto date (30,000)
Book value 50,000 Less: Trade in allowance (40,000)
Loss on exchange 10,000
Computation of Cash Payment: Cost of new equipment 100,000 Less: Trade in allowance (40,000)
Cash payment 60,000
Computation of Gain or Loss on Sale of Land: Cost of land 250,000 Less: Sold for (400,000)
Gain on sale 150,000