NAME: MUHAMMAD USMAN ZAFAR

I.D: 17278.
SEAT NO. 721
PROGRAM: MBA (W)
COURSE: ACCOUNTING FOR
MANAGER
Q: 4.6 (A).

ALPINE EXPEDITIONS
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2011
PARTICULAR DEBIT CREDIT
Cash 13,900
Account receivable 78,000
Unexpired insurance 18,000
Prepaid advertising 2,200
Climbing supplies 4,900
Climbing equipment 57,600
Accumulated depreciation: climbing equipment 38,400
Account payable 1,250
Notes payable 10,000
Interest payable 150
Income taxes payable 1,200
Unearned client revenue 9,600
Capital stock 17,000
Retained earnings 62,400
Client revenue earned 188,000
Advertising expense 7,400
Insurance expense 33,000
Rents expense 16,500
Climbing supplies expense 8,400
Repairs expense 4,800
Depreciation expense: climbing equipment 13,200
Salaries expense 57,200
Interest expense 150
Income taxes expense 12,750
TOTAL AMOUNT 328,000 328,000
Other Data

1. Accrued but unrecorded fees earned as of December 31 amount to $6,400.

2. Records show that $6,600 of cash receipts originally recorded as unearned client
revenue had been earned as of December 31.
3. The company purchased a 12-month insurance policy on June 1, 2011, for $36,000.
4. On December 1, 2011, the company paid $2,200 for numerous advertisements in
several climbing magazines. Half of these advertisements have appeared in print as of
December 31.
5. Climbing supplies on hand at December 31 amount to $2,000.
6. All climbing equipment was purchased when the business first formed. The estimated
life of the equipment at that time was four years (or 48 months).
7. On October 1, 2011, the company borrowed $10,000 by signing an eight-month, 9
percent note payable. The entire note, plus eight months’ accrued interest, is due on
June 1, 2012.
8. Accrued but unrecorded salaries at December 31 amount to $3,100.
9. Estimated income taxes expense for the entire year totals $14,000. Taxes are due in the
first quarter of 2012.
 SOLUTION: 1

ALPINE EXPEDITIONS
ADJUSTING ENTRIES
As on December 31, 2011

DATE PARTICULAR PR DEBIT CREDIT

December,31 Fees receivable 6,400
Fees earned 6,400

December,31 Unearned Client Revenue 6,600

Earned Client Revenue 6.600
December,31 Insurance Expense 3,000
Unexpired Insurance 3,000
December,31 Advertising Expense 1,100
Prepaid Advertising 1,100
December,31 Climbing Supplies Expense 2,900
Climbing Supplies 2,900
December,31 Depreciation Expense (climbing equipment) 1,200
Allowance For Depreciation 1,200
December,31 Interest Expense ( 10,000*9%/12) 75
Interest Payable 75
December,31 Salaries expense 3,100
Salaries payable 3,100
December,31 Income Taxes Expense 1,250
Income Taxes Payable 1,250
SOLUTION: 2

ALPINE EXPEDITIONS
ADJUSTED TRIAL BALANCE
AS ON DECEMBER 31, 2011

PARTICULAR DEBIT CREDIT

Cash 13,900
Account receivable 78,000
Unexpired insurance 15,000
Prepaid advertising 1,100
Climbing supplies 2,000
Climbing equipment 57,600
Accumulated depreciation: climbing equipment 39,600
Account payable 1,250
Notes payable 10,000
Interest payable 225
Income taxes payable 2,450
Unearned client revenue 3,000
Capital stock 17,000
Retained earnings 62,400
Client revenue earned 194,600
Advertising expense 8,500
Insurance expense 36,000
Rents expense 16,500
Climbing supplies expense 11,300
Repairs expense 4,800
Depreciation expense: climbing equipment 14,400
Salaries expense 60,300
Interest expense 225
Income taxes expense 14,000
Fees receivable 6,400
Fees earned 6,400
Salaries payable 3.100
TOTAL AMOUNT 340,025 340,025
SOLUTION: 3

ALPINE EXPEDITIONS
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2011

REVENUE:

Fees earned 6,400

Client revenue earned 194,600
Gross income 201,000
LESS: TOTAL EXPENSE
Advertising expense 8,500
Insurance expense 36,000
Rent expense 16,500
Climbing supplies expense 11,300
Repairs expense 4,800
Depreciation expense 14,400
Salaries expense 60,300
Interest expense 225
Income taxes expense 14,000
Total Expense (166,025)
Net Income 34,975
 SOLUTION: 4

ALPINE EXPEDITIONS
BALANCE SHEET
DECEMBER 31, 2011

ASSETS EQUITIES
CURRENT ASSET LIABILITIES
Cash 13,900 Account payable 1,250
Account receivable 78,000 Notes payable 10,000
Unexpired insurance 15,000 Interest payable 225
Prepaid advertising 1,100 Income taxes payable 2,450
Climbing supplies 2,000 Salaries payable 3,100
Fees receivable 6,400 Unearned client revenue 3,000
Total Current Assets 116,400 Total Liabilities 20,025
FIXED ASSET OWNER EQUITIES
Climbing equipment 57,600 Capital stock 17000
Allowance for depreciation (39,600) 18,000 Add: Net income 34,975
Retained earning 62,400
Owner Equities 114,375
Total assets 134,400 Total Equities 134,400