Q2. Prepare Adjusted Trial Balance for the year ending 31 December 2016 from the
ID: 2431704 • Letter: Q
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Q2. Prepare Adjusted Trial Balance for the year ending 31 December 2016 from the Trial Balance and adjustments of Michael Company given below: Mishal Company Trial Balance As on December 31.2016 Description Debit Credit Dra Account 80.000 Supplies Purchases Sales 55.000 485.000 610,000 80,000 Debtors Creditors 60.500 5.000 6,000 28.000 15.000 4,000 50,000 5000 3.500 Rs. 750,500 Sales Retums Inwards Salaries Rent, Rates, Taxes Insurance E Fuminure Cash in hand Total Rs. 750.500 Adjustments: Depreciate machinery @ 5% p.a, by written down method. Outstanding Salaries Rs. 2,0oo. Insurance paid in advance Rs. 500. Maintain @ 5% allowance for doubtful debts on sundry debtors. Supplies at the end of year of worth Rs. 20,000. Required . . . a. Prepare Journal Entry (DI 10 Marks) b. Adjusted Trial Balance (DI-10 Marks) c. Balance sheet (DI 10 Marks) d. Evaluate each of the Adjustments in your own words (D2- 10 Marks) e. Measure the working capital and Current ratios with required formula (D2 5 Marks) Criticize in your own words the types of ratio applicable for the merchandising company to compute the performance (D2 10 Marks) f.Explanation / Answer
a) Journal Entries
Working Note
1. Depreciate machinery @ 5% p.a. by WDV method.
Machinery - Opening Balance = 50,000
Less : Depreciation (5% of 50,000) = (2,500)
Closing Balance = 47,500
(i) Depreciation a/c Dr. 2500
To Machinery a/c 2500
(ii) Salary a/c Dr. 2,000
To Salary Payable a/c 2,000
(iii) Prepaid Insurance a/c Dr. 500
To Insurance Expense a/c 500
(iv) Provision for Bad and Doubtful Debt a/c Dr. 4,000
To Debtors a/c 4,000
(v) Supplies Expenses a/c Dr. 35,000
To Supplies a/c 35,000
(b) Adjusted Trial Balance
Mishal Company
Adjusted Trial Balance
As on 31st December 2016
Description Debit Credit
Drawings 14,000
Capital Account 80,000
Supplies 20,000
Purchase 485,000
Sales 610,000
Sundry Debtors 76,000
Sundry Creditors 60,500
Sales Return 5,000
Carriage Inward 6,000
Salaries 30,000
Rent, Rate, Taxes 15,000
Insurance Expense 3,500
Machinery 47,500
Furniture 5,000
Cash in Hand 3,500
Depreciation Expense 2,500
Salaries Payable 2,000
Supplies Expense 35,000
Prepaid Insurance 500
Provision for Bad and Doubtful Debt 4,000
TOTAL 752,500 752,500
(c) Balance Sheet
Capital 80,000
- Drawings 14,000
+ Net Profit 24,000 90,000
Creditors 60,500
Salary Payable 2,000
Machinery 47,500
Furniture 5,000
Debtors 80,000
- Prov. B.D.D (4,000) 76,000
Cash in Hand 3,500
Prepaid Insurance 500
Liabilities AssetsCapital 80,000
- Drawings 14,000
+ Net Profit 24,000 90,000
Creditors 60,500
Salary Payable 2,000
Machinery 47,500
Furniture 5,000
Debtors 80,000
- Prov. B.D.D (4,000) 76,000
Cash in Hand 3,500
Prepaid Insurance 500
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