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ADC-I - Adjusting Entries

The document outlines an accounting test focusing on adjusting and reversing entries for Union Trading Company as of December 31, 2006. It provides a trial balance with various account balances and additional information necessary for making adjustments. The task requires the preparation of adjusting and reversing entries based on the provided data and notes.

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sameerhussain.a4
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9 views1 page

ADC-I - Adjusting Entries

The document outlines an accounting test focusing on adjusting and reversing entries for Union Trading Company as of December 31, 2006. It provides a trial balance with various account balances and additional information necessary for making adjustments. The task requires the preparation of adjusting and reversing entries based on the provided data and notes.

Uploaded by

sameerhussain.a4
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ADC PART – I –ACCOUNTING TEST

TOPIC: ADJUSTING & REVERSING ENTRIES


MAX. MARKS: 20 TIME ALLOWED: 45 MINUTES

Question # 1:
The trial balance of Union Trading Company shows among other items the following balances
on 31 December 2006, the end of accounting year.
Debit Credit
Cash --------------------------------------------------------- Rs.50,000
Accounts receivable ------------------------------------- Rs.80,000
Allowance for bad debts ---------------------------------------------------- Rs.5,000
Merchandise inventory --------------------------------- Rs.40,000
Office supplies ---------------------------------------------- Rs.8,000
Prepaid insurance ------------------------------------------ Rs.9,000
Building---------------------------------------------------- Rs.100,000
Allowance for depreciation – building ---------------------------------- Rs.20,000
Equipment ------------------------------------------------- Rs.80,000
Account payable ------------------------------------------------------------- Rs.54,000
10% Bank loan ---------------------------------------------------------------- Rs.60,000
Capital ------------------------------------------------------------------------ Rs.250,000
Drawings --------------------------------------------------- Rs.40,000
Sales revenue --------------------------------------------------------------- Rs.187,000
Rent income------------------------------------------------------------------- Rs.24,000
Advertising expenses------------------------------------ Rs.14,000
Interest expenses (Bank loan) -------------------------- Rs.3,000
Cost of goods sold -------------------------------------- Rs.120,000
Salaries expenses ---------------------------------------- Rs.36,000
General expenses ---------------------------------------- Rs.20,000
Other Information:
i. Allowance for bad debts was estimated at Rs.4,000.
ii. Interest on bank loan is due for six months.
iii. Fixed assets are depreciated @ 20% by Declining Balance Method.
iv. Rent income received on 1 October 2006 representing the rent for the period 1 October
2006 to 31 March 2007.
v. Office supplies of Rs.3,500 are on hand on 31 December 2006.
vi. Premium paid on insurance covering the period 1 April 2006 to 1 April 2009.
vii. Advertising expense for the year Rs.10,000.
viii. Salaries expenses for the year amounted to Rs.40,000.
ix. Accrued rent Rs.5,000.
Required:
a) Prepare adjusting and reversing entries.

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