Question

Unadjusted Trial Balance of Rauf Heavy Construction Machineries is provided below;

Rauf Heavy Construction Machineries
Trial Balance
For the Year Ended, 31st Dec 2019
Accounts	Dr.	Cr.
Cash and Bank	872
Trade Debtors	21,911
Office Supplies	1,691
Prepaid Insurance	48,309
Lose Tools, and Spares	17,370
Fuel and Lubricants	10,805
Computer and Equipment (C/E)	2,575
Accumulated Depreciation (C/E)		600
Furniture and Fixture (F/F)	9,213
Accumulated Depreciation (F/F)		1867
Construction Machinery and Vehicles (CMV)	594,363
Accumulated Depreciation (CMV)		129,770
Land and Building	35,585
Trade Creditors		119,305
Unearned Customer Deposits		17,377
Long Term Loan		65,130
Owner's equity		215,552
Revenue		218,364
Salaries and Wages Expense	23,543
Bank Service Charges (not interest)	53
Utilities expense	1,675
Total	767,965	767,965

Additional information to apply adjustments for the period are as following;

1. Office Supplies left unused Rs 735.
2. Prepaid Insurance was paid as of 1^st September 2019, and covers 1 year of insurance.
3. Lose Tools and spares amounting Rs 11,265 were consumed during the period.
4. Fuel and Lubricants available on hand as of 31^st Dec 2019 were of Rs 4,585
5. The depreciation on fixed assets is to applied on the following schedule
   1. Computer and Equipment Rs 500
   2. Furniture and Fixture Rs 600
   3. Construction machinery and vehicles Rs 29,500
6. Interest on loan is due @ 12% for the year.
7. Received a utility bill of Rs 250 for the month of December, the due date of payment is 12^th January 2020, this is not yet recorded by the accountant.
8. Unearned customer deposits include Rs 3,377 that has now been earned in December 2019.
9. The company has supplied construction machinery to Shabir Builder (Pvt) Ltd on contract starting from 15^th November on Rental agreement of Rs 5 per day, all amount will be paid at maturity of term as of 16^th February 2020. The amount for current portion revenue need to be adjusted

Requirement:

1. Pass adjusting entries in General Journal,
2. Post entries to T-accounts,
3. Prepare adjusted trial balance

Answer 1

Prepare Adjusting entries as follows:

Trn.	Account Title	Debit (₹)	Credit (₹)
Adj. 1	Office Supplies Expense	956
	Office Supplies [1691- 735]		956
Adj. 2	Insurance Expense [48,309 × 4/12]	16103
	Prepaid Insurance		16103
Adj. 3	Loose tool and spares expense	11265
	Loose tool and spares		11265
Adj. 4	Fuel and lubricant expense	6220
	Fuel and lubricant [10,805- 4585]		6220
Adj. 5	Depreciation Expense	30600
	Accumulated depreciation-computer and equipment		500
	Accumulated depreciation-furniture and fixture		600
	Accumulated depreciation-contruction machinery and vehicles		29500
Adj. 6	Interest Expense [65,130 × 12%]	7816
	Interest payable		7816
Adj. 7	Utility Expense	250
	Utility payable		250
Adj. 8	Unearned customer deposits	3377
	Revenue		3377
Adj. 9	Trade debtors [5 × 46 days]	230
	Service Revenue		230

_________________________________________________________________________

Prepare T-Accounts as follows:

______________________________________________________________________

Prepare Adjusted Trial balance as follows:

Adjusted Trial balance
	Debit	Credit
Cash and Bank	872
Trade debtors	22,141
Office supplies	735
Prepaid Insurance	32,206
Loose, tools and spares	6,105
Fuel and lubricant	4585
Computer equipment	2575
Accumulated depreciation [C/E]		1,100
Furniture and Fixture	9,213
Accumulated depreciation [F/F]		2467
Contruction machinery and vehicles	594363
Accumulated depreciation [CMV]		159,270
Land and building	35,585
Trade creditors		119,305
Interest payable		7816
Utility payable		250
Unearned customer deposit		14,000
Long term loan		65,130
Owner's equity		215,552
Revenue		221,971
Salaries and wages expense	23,543
Bank charges	53
Utilities expense	1,925
Office supplies expense	956
Loose, tools and spares expense	11,265
Insurance Expense	16,103
Fuel and lubricant expense	6,220
Depreciation expense	30,600
Interest Expense	7,816
	806861	806861

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