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    Accounting Assignment 2 BSAF Questions

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    Shahzad C7
    This document contains an assignment for a financial accounting course. It includes 3 questions about accounting for promissory notes, equipment depreciation, and computer depreciation. Calculations and journal entries are shown for adjusting and recording various depreciation and interest transactions over time.

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    Accounting Assignment 2 BSAF Questions

    Uploaded by

    Shahzad C7
    8 views3 pages
    This document contains an assignment for a financial accounting course. It includes 3 questions about accounting for promissory notes, equipment depreciation, and computer depreciation. Calculations and journal entries are shown for adjusting and recording various depreciation and interest transactions over time.

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    This document contains an assignment for a financial accounting course. It includes 3 questions about accounting for promissory notes, equipment depreciation, and computer depreciation. Calculations and journal entries are shown for adjusting and recording various depreciation and interest transactions over time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    8 views3 pages

    Accounting Assignment 2 BSAF Questions

    Uploaded by

    Shahzad C7
    This document contains an assignment for a financial accounting course. It includes 3 questions about accounting for promissory notes, equipment depreciation, and computer depreciation. Calculations and journal entries are shown for adjusting and recording various depreciation and interest transactions over time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Assignment # 2 Name:Shahzad Ahmed Channa(1947135) SPRING 2020

    Program: BSAF Class: BSAF 1 A


    Course Name: Introduction to Financial Accounting Duration: By 03.05.2020
    Instructor’s Name: Mr. Asif Ali Khokhar Total Marks: 10

    Course Code: (AF1104) Date: 29.04.2020

    IMPORTANT instructions:
     Read all the questions carefully first and then go for reply
     Marks of each question are mentioned at the end of each question.

    Q # 1. At the beginning of the January, M/s. Momal Maghanani Company issued an


    18-month promissory note for cash worth $150,000 at the rate of 12 percent.
    Although, the interest rate will not be paid by the company until the maturity of the
    promissory note. M/s. Momal Maghanani company closes the accounts every month.
    What is the adjustment entry of this transaction at the end of first month of January
    31? (Marks 2.5)

    Date Particulars Dr Cr
    31 January Promissory Note for 1500
    Cash
    31 January Notes Payable 1500

    Q # 2 Nadeem Company purchased the equipment for $72,000 on January 1, 2019.


    The equipment is expected to have a five year life and a residual value of $6,000.
    Using straight line method, calculate the book value at 31 st December 2019. (Marks
    2.5)

    Cost of the Asset = $72,000


    Residual Value = $6000
    Useful Life = 5 years

    Depreciable Expense = ($72,000 - $6000) / 5 = $13,200

    Year Cost of the Depreciation Accumulated Net Book


    Asset Expense Depreciation Value
    1 72,000 13,200 13,200 58,800
    2 72,000 13,200 26,400 45,600
    3 72,000 13,200 39,600 32,400
    4 72,000 13,200 52,800 19,200
    5 72,000 13,200 66,000 6,000

    Net Book Value = $6000

    Q # 3 On July 1, 2019, Hania Corp. buys a computer system for $260,000 in cash.
    Assume that the computer is expected to have a four-year life and an estimated
    salvage value of $20,000 at the end of that time. (Marks 5)
    Required
    1. Prepare the Journal Entry to record the transaction for the purchase of the computer on
    July 1, 2019.

    Date Particulars Dr Cr
    1/7/2019 Inventory (Computer) 260,000
    1/7/2019 Cash 260,000

    2. Compute the depreciable cost of the computer.

    Cost of the Asset = $260,000


    Estimated Salvage Value = $20,000
    Useful Life = 4 years

    Depreciable Cost = ($260,000 - $20,000) / 4 = $60,000

    3. Using the straight-line method, compute the monthly depreciation.

    Monthly Depreciation = $60,000 / 12 = $5000


    4. Prepare the adjusting entry to record the depreciation at the end of July 2016

    Date Particulars Dr Cr
    31/7/2016 Depreciation Expense 5000
    31/7/2016 Accumulated 5000
    Depreciation

    5. Compute the computer’s carrying value that will be shown on Hania’s balance sheet
    prepared on December 31, 2019

    Cost of the Asset = $260,000


    Depreciation Expense for 6 months = $5000 x 6 = $30,000

    Carrying Value = $260,000 - $30,000 = $230,000

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