BBA FIRST YEAR FIRST SEMESTER EXAMINATION, 2012 Subject Code : 1102 (Principles of Accounting) Time 3 hours Full

l marks 70
[N.B.-The figures in the right margin indicate full marks. Answer any five questions from part A and any four questions from part B.] Part A-Short Questions (Answer any five questions) Marks 6 x 5= 30 1. (a) Define GAAP. Discuss the various principles of GAAP. 3 (b) Why accounting is the language of business? 3 2. (a) Who are the internal uses of accounting information ? 2 (b) Write down the three basic differences of event and Transaction. 4 3. (a) Define the credit term :(i) , (ii) , EOM (b) Distinguish between perpetual and periodic inventory method. 4 4. (a) Is worksheet a part of accounting cycle ? Explain the purpose of worksheet. 3 (b) What are the entries an organization needs to prepare for closing its books of accounts at the end of the each accounting Period? 3 5. (a) What is special journal ?

2 (b) Discuss the nature and advantages of subsidiary ledger. 4 6. (a) What is Bank Reconciliation Statement ? 3 (b) Describe the three principles of accounting information systems. 3 7. (a) What statements are prepared under financial statement ? 3 (b) What is FOB destination? 3

Part B Broad Questions (Answer any four questions ) Marks -10 4 = 40 8. Mr. Hasan invested TK. 15,000 cash in the business on June, 1.Actually he started his own delivery service Ajanta on June 1,2011 .The following transactions occurred during the month of June : 10 June 2 purchased a used van for deliveries for TK 10,000. Rahim tk.2,000 cash and signed a note payable for the remaining balance . 3 paid TK. 500 for wages. 4 Borrowed TK. 700 cash from a bank on a note payable . 5 Performed TK.1000 of services on account . 9 Rahim withdrew TK. 200 cash for personal use . 12 purchased supplies for TK.150 on account . 15 Received a cash payment of TK.750 for services provided on June 5. 17 purchased gasoline for TK.100 on account . 20 Received a cash payment of TK.1500 for services provided .

25 Made a cash payment of TK.500 on a note payable . 30 paid monthly salaries TK.500 . Required: (a)Show the effect of the transactions on the accounting equation (b) prepare an income statement of the June 2011 . 9. (a) Differentiate between periodic inventory system and perpetual inventory system . 2 (b) At the beginning of the current season on April 1 , the ledger of tri-state pro shop showed cash TK. 2500 ,merchandise inventory TK. 3,500 and Tiger woods capital TK.6,000. The following transactions occurred during April:8 April 5 Purchased golf bags, clubs and balls on account from Bravo Co.1700. FOB shipping point, terms , 7 Paid freight on bravo co. purchases TK.80 9 Received credit from Bravo Co. for merchandise returned TK.200 10 Sold merchandise on account to members TK. 950, terms . 12 Purchased golf shoes , sweaters and other accessories on account from Arrow Sportswear 660, terms , . 14 Paid Bravo Co. in full . 17 Received credit from arrow Sportswear for merchandise returned tk.60. 20 Make sales on account to member 700 . terms . 21 paid Arrow Sportswear in full . Required: Record the transactions in journal of the Tri-State Pro Shop using a perpetual inventory system . 10. Mr. Mahabub started Wonderland Park on 1st July 2008. he following events and transactions were occurred during the July . 10 July 1 Invested cash TK .6, 00,000 in the business. 5 Purchase Land costing TK.60,000 cash .

11 Incurred advertising expense of TK. 4,000 on account. 13 Hired park manager at a salary of TK. 5,000 per month effective from 1st August . 15 Borrowed TK. 30,000 from Islami Bank on a notes payable. 17 Paid TK. 6,700 in cash for one year Insurance policy . 24 Sold 200 coupon books for TK. 25 each . Each book contains 10 coupons that entitle the holder to one admission to the park. 28 Paid 50% of the advertising bill that incurred on July 11. Required : (a) Journalize the July transactions ; (b) Post to the ledger account ; and (c) Prepare a Trial Balance. 11. Tanjim Graphics Company was organized on January 1, 2011. At the end of the first 6 months of operations the trial balance contained the following accounts:10 Debits Cash Accounts Receivable Equipment Insurance expense Salaries expense Supplies expense Advertising expense Rent expense Utilities expense Taka 9,500 14,000 45,000 1,800 30,000 3,700 1,900 1,500 1,700 1,09,10 0 Credit Notes payable Accounts payable Tanjim capital Graphic Revenue Consulting Revenue Taka 20,000 9,000 22,000 52,100 6,000

1,09,100

Analysis reveals the following additional data :(i) The TK. 3,700 balance in supplies expense represents supplies purchased in January . At June 30 TK.2,300 of supplies was on hand .

(ii)

The note payable was issued on February 1. It is a 10%, 6 months note. (iii) The balance in insurance expense is the premium on a one year policy ,dated March 1, 2011. (iv) Consulting fees are credited to revenue when received . At June 30, consulting Fees of Tk.4,100 are unearned . (v) Graphic revenue earned but unrecorded at June 30, TK.3,000. (vi) Depreciation is TK. 5,000 per year . Required : (a) Journalize the adjust ting entries at June 30, 2011; (b) Prepare an adjusted trial balance 12. The unadjusted trial balance of Methi services were as follows for the year ended December 31,2011 :10 T/B 31 December 2011 Accounts Title Cash Notes receivable Supplies Prepaid Insurance Equipment Accumulated dep. Equipment Building Accumulated dep. building. Land Accounts payable Unearned service revenue Notes payable Methiss Capital Drawings Service revenue Salaries expense Utilities expense Advertising expense Debit (tk.) 43,350 51,700 2,800 8,950 1,37,050, 2,69,500 1,72,800 93,500 73,650 44,000 93,500 1,71,450 19,000 84,850 10,850 5,650 5,300 Credit (tk)

7,400

6,47,650

6,47,650

Adjusting entries : (i) Unearned service revenue has been earned Tk. 22,000 (ii) Accrued interest revenue Tk. 850. (iii) Supplies on hand Tk.2,050 (iv) Accrued salary Tk.3,000 (v) Insurance expired Tk. 1,950 (vi) Depreciation expense ; Furniture Tk. 2,400, building Tk.2,300 (vii) Accrued interest Tk. 1,100 (viii) Accrued advertising expense Tk.300. Required : Prepare a ten Column worksheet and show necessary Adjusting entries. 13. The trial balance of Navana Ltd. for the year ending Dec.31,2011 is shown below :10 Trial Balance of Navana Ltd. December 31,2011 Accounts Title Cash Accounts receivable Merchandise inventory Prepaid insurance Equipment Land Accumulated dep. Equipment Accounts payable Sales revenue Sales returns and allowances Capital Sales discount Purchase Debit (tk.) 30,000 55,000 60,000 3,600 70,000 14,000 Credit (tk)

20,000 62,000 4,82,000 9,200 1,00,600 7,800 3,44,00

Freight in Purchase returns Purchase discount Salaries expenses Interest Utilities

10,000 2,400 4,000 41,400 14,000 12,200 6,71,400

6,71,400

Other information : (1) Merchandise inventory on hand at Dec 31,2011 is TK.80,000. (2) Prepaid salaries TK. 4,000. (3) Insurances expired TK.2,000 during the year . (4) Provide depreciation @ 10% on equipment . Requirements : (a) Prepare a multiple steps income statement for the year ended on December , 2011. (b) Prepare a classified balance sheet as at 31st December, 2011.

Part B Ans. to the question no. 8 Ajanta delivery service Tabular Analysis For the month of June -2011 Cash June; +15,00 1 0 2 (2000) Assets A/C Delivery receivabl Van e +10,000 = Supplie s Liabilities + O. E Remarks A/C N/P Capital payabl e +15,000 Invested +8,00

Req.: (a) Date

0 3 4 5 9 12 15 17 20 25 30 (500) +700 +1,000 (200) +150 +750 +1500 (500) (500) 14,250 250 10,000 24,650 150 250 (500) (500) 4,200 16,200 24,650 Salaries esp. -750 +100 (100) +1500 Gasoline exp. Service provided +150 +700 +1,000 (200) Service provided withdra wn (500) wages exp.

Req.: (b)

Ajanta delivery service Income statement For the month of June -2011 Explanation Service Revenue Tk. 500 100 500 1,100 1,400 Tk. 2,500

(1000+1500) Less, Expense : Wages Expense Gasoli ne Expense Salarie s Expense Net income

Ans. to the question no. 9 (b) Tri-state pro shop Journal entries (Under perpetual system) Date April , 5 Explanation Ref. Merchandise Inventory Accounts Payable [ Purchase M.T. on account] Merchandise Inventory Cash [ Paid to Freight] Accounts Payable Merchandise Inventory [Merchandise Inventory return to Bravo Co.] Accounts Receivable Sales [Merchandise Inventory sold to members] No entry for cost price because cost price was not given. Merchandise Inventory Accounts Payable [ Purchase M.T. on account] Accounts Payable Cash Merchandise Inventory [Paid to Bravo Co. with in discount period] 660 660 1500 1470 30 60 60 Dr (tk) 1,700 Cr(tk) 1,700 80 80 200 200 950 950

7 9

10

10 12

14

17

 20 20 20

Accounts Payable Merchandise Inventory [Merchandise Inventory return to Arrow sportswear.] Accounts Receivable Sales [Merchandise Inventory sold on accounts] No entry for cost price because cost price was not given. Accounts Payable Cash Merchandise Inventory [Paid to Arrow sportswear less discount] Ans. to the question no. 10 Wonderland Park Journal entries Explanation Ref. Cash Mahabubs capital [ Cash invested by the owner] Land Cash [ Purchase land in cash] Advertising expense Accounts Payable [Incurred advertising exp. on account] No entry

700 700

600 594 6

Req.: (a) Date July , 1

Dr (tk) 6,00,000 60,000

Cr(tk) 6,00,000 60,000

5 11 13

4,000 4,000

30,000

15 17 24

28

Cash Notes Payable [ Borrowed from Islami Bank on a N/P] Pre paid insurance Cash [Paid to one year insurance policy] Cash Unearned Revenue [Sold coupon book in advance.] Accounts Payable Cash [Paid to accounts payable]

30,000 6,700 6,700 5,000 5,000 2,000 2,000

Req.: (b) Ledger Date July , 1 5 15 17 24 28 Date July , 1 Explanation Cash Ref. Dr(tk) 6,00,000 30,000 6,700 5,000 2,000 Capital Ref. Cr(tk) 6,00,000 Balance 6,00,000 5,40,000 5,70,000 5,63,300 5,68,300 5,66,300

Explanation

Dr(tk)

Cr(tk) 6,00,000

Balance 6,00,000

Date July , 5 Date

Explanation

Land Ref.

Dr(tk) 60,000

Cr(tk)

Balance 60,000 Balance

Advertising expense Explanation Ref. Dr(tk)

Cr(tk)

July , 11

4,000

4,000

Date July , 11 28 Date July , 15

Explanation

Accounts Payable Ref. Dr(tk) 2,000 Notes Payable Ref. Dr(tk)

Cr(tk) 4,000

Balance 4,000 2,000

Explanation

Cr(tk) 30,000

Balance 30,000

Date July , 17

Explanation

Prepaid Insurance Ref. Dr(tk) 6,700

Cr(tk)

Balance 6,700

Date July , 24

Unearned Revenue Explanation Ref. Dr(tk)

Cr(tk) 5,000

Balance 5,000

Req.: (c) SL. No.

Wonderland Park Trial Balance For the month of July,2008 Accounts titles Ref. Dr(tk) Cr(tk)

1 2 3 4 5 6 7 8

Cash Capital Land Advertising exp. Accounts payable Notes payable Prepaid Insurance Unearned Revenue

5,66,300 6,00,000 60,000 4,000 2,000 30,000 6,700 5,000 6,37,000 6,37,000

Ans. to the question no. 11 Req.: (a) Date June , 30/2011 Tajim Graphics Comp. Adjusting entries Explanation Supplies Supplies exp. [To record Supplies on hand] Interest Exp. Interest payable [To record Interest Exp. on notes payable (20,000 12% )] Prepaid Insurance Insurance exp. ( ) [To record unexpired insurance] Consulting revenue Unearned consulting revenue [To record unearned consulting revenue] Accounts Receivable Graphics Revenue [To record graphics Revenue on a/c] Ref. Dr (tk) 1300 1,000 1,000 Cr(tk) 1300

30

1,200 1,200 1,100 1,100

30

30

30 30

2,000 1,500

2,000 1,500

Dep. exp. Equipment Accumulated dep. equipment ( 3000 ) [To record dep. exp.] Tajim Graphics Comp. Adjusting Trial Balance For the month of July,2008 Accounts titles Cash Accounts receivable (1400+2000) Equipment Insurance exp. (1800-1200) Salaries Exp. Supplies Exp. (3700-1300) Advertising exp Rent exp. Utilities exp. Notes payable Accounts payable Tanjims Capital Graphics Revenue Consulting revenue Supplies Interest exp. Interest payable Prepaid Insurance Unearned consulting revenue Dep. exp. Accumulated dep. Ref. Dr(tk) 9,500 16,000 45,000 600 30,000 2,400 1,900 1,500 1,700 Cr(tk)

Req.: (b) SL. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

20,000 9,000 22,000 54,100 4,900 1,300 1,000 1,000 1,200 1,100 1,500 1,500 1,13,600 1,13,600

Ans. to the question no. 12 Methi Service. Work Sheet

For the month of Dec. 31,2011 Trial Balance Explanation Cash Notes receivable Supplies Prepaid Insurance Equipment Acc. dep. Equip. Building Acc. dep. Building Land Accounts payable Unearned service revenue Notes payable Methiss Capital Drawings Dr 43,350 51,700 2,800 8,950 1,37,0 50 7,400 2,69,5 00 1,72,8 00 93,500 73,650 44,000 22,0 00 93,500 1,71,4 50 1,900 22,0 00 13,85 0 5,650 19,00 0 1,06,8 50 1385 0 5650 1068 50 2,30 0 93,50 0 73,65 0 22,00 0 93,50 0 1,71,4 50 19,0 00 2,69,5 00 1,75,1 00 750 1,95 0 Cr Adjustment s Dr Cr Ad; Trial Balance Dr Cr 43,35 0 51,70 0 2,050 7,000 1,37,0 50 7,400 Income Statement Dr Cr Balance Sheet Dr Cr 43,3 50 51,7 00 2,05 0 7,00 0 1,37, 050 7,40 0 2,69, 500 1,75, 100 93,5 00

Service 84,850 revenue Salaries Exp. 10,850 3,00 0 Utilities 5,650

exp. Advertising exp. Interest revenue Interest revenue Supplies exp. Salaries payable Insurance exp. Dep. exp furniture Dep. exp Building Acc. dep. furniture Interest exp. Interest payable Advertising payable Net income

5,300

300 850 850 750 3,00 0 1,95 0 2,40 0 2,30 0 2,40 0 1,10 0 1,10 0 300

5,600 850 850 750 3,000 1,950 2,400 2,300 2,400 1,100 1,100 300

5600 850 850 750 3,00 0 1950 2400 2300 2,40 0 1100 1,10 0 300

6,47,6 50

6,47,6 50

34,6 50

7410 74,1 0 00 34,6 6,57,6 65760 1077 1077 6240 6240 50 00 0 00 00 00 00

Date Dec. , 31/2011

Methi Service. Adjusting entries Explanation Unearned Service revenue Service revenue [To record Service revenue]

Ref.

Dr (tk) 22,00

Cr(tk) 22,000

31 31 31

Interest Receivable Interest revenue [To record Interest revenue] Supplies Exp.(2800-2050) Supplies [To record Supplies Exp.] Salaries Exp. Salaries payable [To record unpaid salaries] Insurance exp. Prepaid Insurance [To record Insurance exp] Dep. exp. Furniture Accumulated dep. Furniture Dep. exp. Building Accumulated dep. Building [To record dep. exp.] Interest Exp. Interest payable [To record Interest accrued] Advertising exp. Advertising payable [To record Interest accrued Advertising exp.] Ans. to the question no. 13

850 850

750 750 3,000 3,000 1,950 1,950 2,400 2,300 1,100 1,100 300 300 2,400 2,300

31 31

31

31

W-1

Net Sales : Sales Revenue = 4,82,000 Less, Sales return = 9,200

4,72,800 Less, Sales discount = 7,800 4,65,000 W-1 Net Purchase : Purchase Less, Purchase return = 3,44,000 = 2,400 3,41,600 Less, Purchase discount = 4,000 3,37,600 Add. Freight in = 10,000 3,47,600

W-1

Cost of goods sold : Opening Inventory = Add. Net Purchase 60,000 = 3,47,600 4,07,600 Less, Ending Inventory = 80,000 3,27,600 Navana Ltd. Income statement For the year ended 31, Dec. -2011 Explanation Sales Revenue (w-1) Less, cost of goods sold (w-3) Gross profit Operating and other exp : Salaries exp. Less, Prepaid = = 41,400 4,000 Tk. 4,65,000 3,27,600 Tk. 1,37,400

Insurance exp.

37,400 2,000 7,000

12,200 Depreciation exp. Equipment Utilities exp. Non Operating exp: Interest exp. Net income 64,800 14,000 72,600

Navana Ltd. Owners equity statement For the month of Dec 31, 2011 Explanation Capital Add. Net income

Tk. 1,00,600 64,800 1,65,400

Navana Ltd. Balance Sheet as at Dec 31, 2011 Explanation Assets : Current assets : Cash Accounts Receivable Prepaid insurance 3,600 less, expired 2,000 Prepaid Salaries Ending Merchandise inventory Fixed assets : Equipment 43,000 14,000 Tk. 30,000 55,200 1,600 4,000 80,000 Tk

70,000 less, acc. dep. 10%(20,000+7,000) 27,000 Land Liabilities and O.E.: Current Liabilities : Accounts payable Owners equity 62,400 1,65,400

2,27,800

2,27,800