Question 1 (4 Marks)

Case 1 (2 Marks) Following are unadjusted balances of selected accounts in the trial balance of the Mohd English Teaching Institute at December 31, 2021.

Teaching Supplies	7,000
Prepaid insurance	12,000
Equipment	110,000
Prepaid rent	6,000

1. An analysis of the insurance policies shows that the balance of the insurance coverage is $2,000.

2. A physical inventory count shows that $4,500 of teaching supplies inventory available are on hand at year end 2021.

3. The equipment was purchased in May 2021. Annual depreciation is calculated to be $12,000. (Note monthly depreciation needs to be determined).

4. The Institute pays its only employee $40 a day for a 5-day week Monday through Friday. Year- End 2021 falls on Wednesday.

Required

Prepare journal entries to adjust the accounts

	Account	Debit	Credit
1.
2.
3.
4.

Case 2 (2 Marks) Majid company is authorized by its Board of Directors to issue 400,000 common shares of $2 par value. During the first month of operations the following equity transactions occurred:

Jan. 6 Paid legal fees of $8,000 and issued 1,000 common shares.

Jan. 10 Sold 80,000 common shares for $5 per share.

Jan. 20 Purchased machinery with a market value of $120,000 in exchange of 50,000 common shares.

Jan. 22 Issued additional 10,000 common shares for $10 share.

Required:

Prepare journal entries to record the above transactions.

Answer

Date	Account	Debit	Credit