Final Term Paper

FOUNDATION UNIVERSITY ISLAMABAD
RAWALPINDI CAMPUS
Final Term Examinations (SPRING-2021)
Programme: BSAF Semester: 2

Course Title: Principles of Accounting Section:
Instructor Name: Muhammad Naeem ([email protected]) Max Marks: 25
Time Allowed: 03 Hours Date: June 30, 2021
 Be brief and to the point.
Question No. 1 (15)
ABC Company provides quality instruction to aspiring artists. The business adjusts its accounts
monthly, but performs closing entries annually on December 31. This is the studio’s unadjusted
trial balance dated December 31, 2011.
ABC Company
Unadjusted Trial Balance
December 31, 2011
Debits Credits
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,380
Client fees receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,250
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Prepaid studio rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Studio equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,000
Accumulated depreciation: studio equipment. . . . . . . . . . . . . . . . . . . . $ 52,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,420
Note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
Unearned client fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Client fees earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,310
Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Salary expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,250
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
Studio rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,250
Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300
Depreciation expense: studio equipment . . . . . . . . . . . . . . . . . . . . . . . 8,800
Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
$248,210 $248,210
Other Data
1. Supplies on hand at December 31, 2011, total (your registration number * 20).
2. The studio pays rent quarterly (every three months). The last payment was made November 1,
2011. The next payment will be made early in February 2012.
3. Studio equipment is being depreciated over 120 months (10 years).
4. On October 1, 2011, the studio borrowed $24,000 by signing a 12-month, 12 percent note
payable. The entire amount, plus interest, is due on September 30, 2012.
5. At December 31, 2011, $(your registration number *30) of previously unearned client fees had
been earned.
6. Accrued, but unrecorded and uncollected client fees earned total $(Your registration number *
10) at December 31, 2011.
7. Accrued, but unrecorded and unpaid salary expense totals $(Your registration number * 15) at
December 31, 2011.
8. Accrued income taxes expense for the entire year ending December 31, 2011, total $ (Your
registration number * 18). The full amount is due early in 2012.
Instructions
a. Prepare the necessary adjusting journal entries on December 31, 2011. Prepare also an adjusted
trial balance dated December 31, 2011.
b. From the adjusted trial balance prepared in part a, prepare an income statement and statement
of retained earnings for the year ended December 31, 2011. Also prepare the company’s balance
sheet dated December 31, 2011.
c. Prepare the necessary year-end closing entries.
d. Prepare an after-closing trial balance.
Question No. 2 (10)

Tammy Touchtone operates a talent agency called Touchtone Talent Agency. Some clients pay in
advance for services; others are billed after services have been performed. Advance payments are
credited to an account entitled Unearned Agency Fees. Adjusting entries are performed on a
monthly basis. Closing entries are performed annually on December 31. An unadjusted trial
balance dated December 31, 2011, follows. (Bear in mind that adjusting entries have already been
made for the first 11 months of 2011, but not for December.)
Touchtone Talent Agency

Unadjusted trial balance
December 31, 2011
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,950
Fees receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,300
Prepaid rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
Unexpired insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Accumulated depreciation: office equipment . . . . . . . . . . . . . . . . . . . . $ 12,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
Note payable (due 3/1/12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Unearned agency fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,800
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800
Agency fees earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,500
Telephone expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
Office supply expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,130
Depreciation expense: office equipment . . . . . . . . . . . . . . . . . . . . . . . 2,750
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100
Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,640
Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
$108,000 $108,000
Other Data
1. Office equipment is being depreciated over 60 months (5 years).
2. At December 31, 2011, $ (Your registration number * 20) of previously unearned agency fees
had been earned.
3. Accrued but unrecorded and unpaid salary expense totals $1,360 at December 31, 2011.
4. The agency pays rent quarterly (every three months). The most recent advance payment of
$1,800 was made November 1, 2011. The next payment of $1,800 will be made on February 1,
2012.
5. Accrued but unrecorded and uncollected agency fees earned total $(Your registration number *
40) at December 31, 2011.
6. Office supplies on hand at December 31, 2011, total $530.
7. On September 1, 2011, the agency purchased a six-month insurance policy for $750.
8. On December 1, 2011, the agency borrowed $(Your registration number * 15) by signing a
three-month, 9 percent note payable. The entire amount borrowed, plus interest, is due March 1,
2012.
9. Accrued income taxes payable for the entire year ending December 31, 2011, total $(Your
registration number * 5). The full amount is due early in 2012.
Instruction: Prepare 12 Column Work Sheet.

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FOUNDATION UNIVERSITY ISLAMABAD

Programme: BSAF Semester: 2

 Be brief and to the point.

Question No. 1 (15)

Question No. 2 (10)

Touchtone Talent Agency

Instruction: Prepare 12 Column Work Sheet.

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