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FIN621 Assignment # 1 Solution

Thursday, October 28, 2010 Posted In Edit This
Solution:

Assignment No. 01
FIN-621 Financial Statement Analysis

Adjustment Entry (1)
Accrual Entry of Salary Expense,

Date
Description
L/F
Debit
Amount (Rs.)
Credit
Amount (Rs.)
31-12-09
Salaries Expense
               Salary Payable
(Salary expense M/O Dec-09 Adjusted)

660

660

Explanation:
                  Salary month of Dec-09 accrued but not yet paid. So we make an accrual entry of salary expense for charge this expense in Dec-09 trial balance.


Adjustment Entry (2)
Adjustment Entry of office supply,

Date
Description
L/F
Debit
Amount (Rs.)
Credit
Amount (Rs.)
31-12-09
 Office Supply Expense
               Office Supply Prepaid
(Office Supply expense M/O Dec-09 Adjusted)

432

432

Explanation:
                        Office supply purchase for more then one financial period. We do not charge this expense in current accounting period because we use its benefit long time. So with this entry we charge only such an amount as uses of office supply.


Adjustment Entry (3)
Depreciation charge on Machinery,

Date
Description
L/F
Debit
Amount (Rs.)
Credit
Amount (Rs.)
31-12-09
Depreciation Machinery
        Accumulated depreciation machinery
(Depreciation on Machinery m/o Dec-09 adjusted)

660

660

Explanation:
                  Depreciation is an expense who we charge on relevant fixed asset. Because fixed assets like Building, machinery, give us a long time benefit so we charge it in our balance sheet in Assets side but as its uses its life decrease. And this decrease in life on fixed asset we charge it as expense in the income statement as the name of depreciation.


Adjustment Entry (4)
Consulting Fees (Income) Receivable,

Date
Description
L/F
Debit
Amount (Rs.)
Credit
Amount (Rs.)
31-12-09
Consulting Fees Receivable
              Consulting Fees Income
(Consulting Fees Receivable m/o Dec-09 adjusted)

1020

1020

Explanation:
                  This entry made because we provide services to our customer but still not received payment. So we debit it’s our receivable account who effect in balance sheet in asset side and credit our income account that its increase our net income in income statement. Its increase our assets (Balance Sheet) and also increase our income (Income Statement).

Adjustment Entry (5)
Unearned Consulting Fees,

Date
Description
L/F
Debit
Amount (Rs.)
Credit
Amount (Rs.)
31-12-09
Unearned Consulting Fees
        Consulting Fees Income
(Adjust unearned Consulting Fees Account )

252

252

Explanation:
      Some time customer give us advance payment but not yet use our services. This advance consulting fees is not our income so we charge it as unearned income account who effect in balance sheet in liability side. But when we give services against this advance income then we charge it by the above mention entry in our income statement. Its decrease liability (Balance Sheet) and increase our income (Income Statement).
     


The above highlighted columns are the adjustments which cause the trial balance to change..
In other words, it is the comparison of trail balance and adjusted trial balance. 
....................

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