PA Lecture 10

American International University – Bangladesh
BBA 1102
Principles of Accounting
Session 10
What we have discussed in the last class….
● Adjusting entries are required at the end of an accounting period

● Adjustments are required only for the current accounting period,
e.g., a loan is taken at the mid of the current accounting period
will be adjusted for interest expense only for the time the loan is
used during the period
● Worksheet is a working paper (not a step in accounting cycle)
● Adjusted trial balance figures are used to prepare income
statement and balance sheet
● Formal financial statements prepared under the course are
income statement, owner’s equity statement and balance sheet
● Income statement includes income and expenses for the period
● Owner’s equity statement includes capital, net profit/loss, and
drawings
● Balance sheet should include only assets and liabilities (and
owner’s equity) in a classified format
DISCUSSION TOPICS
Review: Recording process

▪ Tabular analysis
▪ Journal entries
▪ Ledger accounts
▪ Trial balance
Recording Process
START Identification of a transaction using a Without a document, accountants

source document (invoice) never record anything
Identification of changes in assets, Dual effects must be identified. Changes

liabilities, income, and expenses could be in any item(s) and in any direction
Process
through
ledger A/E Dr. for increase, L/I Cr. for increase
accounts Apply golden rule of debit and credit Reverse for decrease
Write the debit effect first XXXX Account Debit $QQ

and then the credit effect YYYY Account Credit $QQ
In-class Practice 5
minutes
Prepare Tabular Analysis

Selected transactions for T. Carter, an interior decorator are as follows.
1. Took a loan of $3,000
2. Purchased supplies on account for $700.
3. Paid $500 cash for advertising.
4. Billed customers $2,300 for services performed.
5. Received $1,100 cash from customers billed on January 11.
A = L + OE
Assets Liabilities
Owner’s
Date Remarks
Account Accounts Equity
Cash Supplies Loan
receivable payable
1 3,000 - - 3,000 - -
2 - 700 - - 700 -
3 (500) - - - - (500) Advertisement expense
4 - - 2,300 - - 2,300 Service revenue
5 1,100 - (1,100) - - -
In-class Practice 10
minutes
Prepare Journal Entries
Cash account Dr. 5,000

Jan. 02 Invested $5,000 cash in business.
Capital account Cr. 5,000
Advertisement expense Dr. 500
Jan. 03 Paid $500 cash for advertising.
Cash account Cr. 500
Account receivable Dr. 2,300
Jan. 11 Billed customers $2,300 for services performed.
Service revenue Cr. 2,300
Supplies account Dr. 700
Jan. 16 Purchased supplies on account for $700.
Accounts payable Cr. 700
Cash Dr. 1,100
Jan. 20 Received $1,100 cash from customers billed on January 11.
Accounts receivable Cr. 1,100
Accounts payable Dr. 400
Jan. 23 Paid creditor $400 cash on balance owed.
Drawings account Dr. 1,200
Jan. 28 Withdrew $1,200 cash for personal use by owner.
Cash account Cr. 1,200
In-class Practice 5
minutes
Prepare Ledger Accounts
Cash account Dr. 5,000

Jan. 02
Capital account Cr. 5,000 Cash Account
Advertisement expense Dr. 500
Jan. 03 Date Explanation Ref. Debit Credit Balance
Jan 2 5,000 - 5,000
Account receivable Dr. 2,300 3 - 500 4,500
Jan. 11
Service revenue Cr. 2,300 20 1,100 - 5,600
Supplies account Dr. 700 23 - 400 5,200
Jan. 16 28 - 1,200 4,000
Accounts payable Cr. 700
Cash Dr. 1,100 Accounts Payable Account
Jan. 20
Accounts receivable Cr. 1,100 Date Explanation Ref. Debit Credit Balance
Accounts payable Dr. 400 Jan 16 - 700 700
Jan. 23
Cash account Cr. 400 23 400 - 300
Drawings account Dr. 1,200

Jan. 28
Cash account Cr. 1,200
In-class Practice 5
minutes
Prepare Trial Balance as on January 30, 20X1
Cash Account Accounts Receivable Account

Date Explanation Ref. Debit Credit Balance Date Explanation Ref. Debit Credit Balance
Jan 2 5,000 - 5,000 Jan 11 2,300 - 2,300
3 - 500 4,500 20 - 1,100 1,200
20 1,100 - 5,600
23 - 400 5,200 Supplies Account
28 - 1,200 4,000 Date Explanation Ref. Debit Credit Balance
Capital Account Jan 16 700 - 700
Date Explanation Ref. Debit Credit Balance Accounts Payable Account
Jan 2 - 5,000 5,000
Date Explanation Ref. Debit Credit Balance
Advertisement Expense Account Jan 16 - 700 700
Date Explanation Ref. Debit Credit Balance
23 400 - 300
Jan 3 500 - 500
Service Revenue Account Drawings Account
Date Explanation Ref. Debit Credit Balance Date Explanation Ref. Debit Credit Balance
Jan 11 - 2,300 2,300 Jan 28 1,200 - 1,200
In-class Practice 5
minutes
Prepare Trial Balance as on January 30, 20X1
XX___XX
Trial Balance
as on 31st January 20X1
Sl. Amount ($)
Accounts Title Ref.
No. Debit Credit
1. Cash Account 4,000 -
2. Capital Account - 5,000
3. Advertisement Expense Account 500 -
4. Service Revenue Account - 2,300
5. Accounts Receivable Account 1,200 -
6. Supplies Account 700 -
8. Accounts Payable Account - 300
9. Drawings Account 1,200 -
Total 7,600 7,600
Quiz 2
15 Minutes
10 MCQ
Answer all questions

Upcoming Assessments
[March 1 and 3]
VIVA
[Based on Sessions 1 to 10]
Review Class
[March 8]
Mid Semester Assessment

[March 10]
[Based on Sessions 1 to 10]
VIVA schedule
Student ID Date Time Student ID Date Time
17-35571-3 Mar 1 (Monday) 3:15 - 3:30 pm 20-42494-1 Mar 3 (Wednesday) 2:45 - 3:00 pm
18-38005-2 Mar 1 (Monday) 3:15 - 3:30 pm 20-42547-1 Mar 1 (Monday) 2:15 - 2:30 pm
19-41514-3 Mar 3 (Wednesday) 2:15 - 2:30 pm 20-42962-1 Mar 1 (Monday) 3:15 - 3:30 pm
20-41912-1 Mar 3 (Wednesday) 3:15 - 3:30 pm 20-43041-1 Mar 3 (Wednesday) 2:00 - 2:15 pm
VIVA
[20% marks]
Date: March 1 and March 3

Time: 2:00 – 3:30 pm
[Check your slot]
Reminders:
• Be ready to get a video call at the time slot specified
• Be with an acceptable attire
• Please keep your device (mobile/laptop) in a fixed place
• Make sure your audio and video is working fine
• Be in a quiet place

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American International University – Bangladesh

● Adjusting entries are required at the end of an accounting period

Review: Recording process

START Identification of a transaction using a Without a document, accountants

Identification of changes in assets, Dual effects must be identified. Changes

Write the debit effect first XXXX Account Debit $QQ

Prepare Tabular Analysis

Prepare Journal Entries

Cash account Dr. 5,000

Prepare Ledger Accounts

Cash account Dr. 5,000

Drawings account Dr. 1,200

Prepare Trial Balance as on January 30, 20X1

Cash Account Accounts Receivable Account

Prepare Trial Balance as on January 30, 20X1

Answer all questions

Mid Semester Assessment

Date: March 1 and March 3

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