October, 2021

Question No. 3
Mr. Ahmad Abdullah started his consultancy firm on August 1, 2021 with cash investment of Tk.300,000.
Following events and transactions occurred during the month

August-2 : Hired a secretary at salary of Tk.20,000 per month.

August-3 : Purchased supplies of Tk.12,000 on account.
August-8 : Paid office rent of Tk.25,000 cash for the month.
August-11 : Completed a tax assignment and billed the client Tk.15,000 for the services provided.
August-12 : Received Tk.12,000 advance as management consulting engagement.
August-17 : Received Tk.5000 cash for the service provided on August 11, 2021.
August-31 : Paid secretary Tk.20,000 as salary for the month.
August-31 : Paid 50% of the due for purchasing of supplies on August 3, 2021.

Required:
i) Journalize the transactions;
ii) Post to the ledger accounts and
iii) Prepare a trial balance as of August 31,2021.

Solution

General Journal
Date Accounts and Explanation L.F. Debit Credit
2021 01 Cash Account ….Dr. 3,00,000
August Capital Account ….Cr. 3,00,000
02 Not a financial transaction
03 Purchase Account Dr. 12,000
Accounts Payable Cr. 12,000
08 Office Rent Dr. 25,000
Cash Account Cr. 25,000
11 Bills Receivable …Dr. 15,000
Service Revenue …Cr. 15,000
12 Cash Account …Dr. 12,000
Prepaid Income …Cr. 12,000
17 Cash Account Dr. 5,000
Bills Receivable Cr. 5,000
31 Salary Expenses Dr. 20,000
Cash Account Cr. 20,000
31 Accounts Payable Dr. 6,000
Cash Account Cr. 6,000

Page 1 of 17
 General Ledger

Cash Account No. 1

Date Explanation Folio Debit Credit Balance
2021 01 Capital 3,00,000 3,00,000
August 08 Office Rent 25,000 2,75,000

12 Prepaid Income 12,000 2,87,000

17 Bills Receivable 5,000 2,92,000

31 Salary Expenses 20,000 2,72,000

31 Accounts Payable 6,000 2,66,000

31 Balance 2,66,000

Bills Receivable Account No. 2

Date Explanation Folio Debit Credit Balance

2021 11 Service Revenue 15,000 15,000
August
17 Cash Account 5,000 10,000

31 Balance 10,000

Office Rent Account No. 3

Date Explanation Folio Debit Credit Balance

2021 08 Cash Account 25,000 25,000
August
31 Balance 25,000

Accounts Payable Account No. 4

Date Explanation Folio Debit Credit Balance

2021 03 Purchase Account 12,000 12,000
August
31 Cash Account 6,000 6,000

31 Balance 6,000

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Capital Account No. 5

Date Explanation Folio Debit Credit Balance

2021 01 Cash 3,00,000 3,00,000
August
31 Balance 3,00,000

Purchase Account Account No. 6

Date Explanation Folio Debit Credit Balance

2021 03 Accounts Payable 12,000 12,000
August
31 Balance 12,000

Service Revenue Account No. 7

Date Explanation Folio Debit Credit Balance

2021 11 Bills Receivable 15,000 15,000
August
31 Balance 15,000

Salary Account No. 8

Date Explanation Folio Debit Credit Balance

2021 31 Cash 20,000 20,000
August
31 Balance 20,000

Prepaid Income Account No. 9

Date Explanation Folio Debit Credit Balance

2021 12 Cash Account 12,000 12,000
August
31 Balance 12,000

Page 3 of 17
 Trial Balance
As at 31st August 2021

Sl. Accounts Debit (Tk.) Credit

No. (Tk.)

1 Cash 2,66,000

2 Bills Receivable 10,000

3 Office Rent 25,000

4 Accounts payable 6,000

5 Purchase Account 12,000

6 Capital 3,00,000

7 Service Revenue 15,000

8 Prepaid Income 12,000

9 Salary 20,000

10 Total 3,33,000 3,33,000

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 Question No. 4 - d
A transport company purchased 03(Three) buses details of which are summarized as under:

Date of Cost Useful Salvage Depreciation Method

Bus
acquisition (Tk.) life Value (Tk.) (Applied)

1 01.01.2015 73,00,000 5 Years 300,000 Straight line

2 01.01.2016 62,00,000 4 Years 200,000 Double Declining Balance
3 01.01.2016 70,50,000 5 Years 50,000 Unit of activity

For bus 3, total kilometers were expected to be 120,000. Actual kilometers of use were 24,000 in 2016;
34,000 in 2017; 30,000 in 2018; 20,000 in 2019 and 12,000 in 2020.

Requirement: Prepare depreciation schedule for each of the buses.

Solution:
(i) Straight Line method:
Cost – Salvage Value
Depreciation =
No. of Years in Useful Life

Cost = Tk.73,00,000, Salvage value = Tk.3,00,000 and Years of Useful Life = 5 Years.
Date of Acquisition is 01.01.2015.
So, Dep. per year = (Tk.73,00,000 – Tk. 3,00,000)/5 = Tk.14,00,000

(ii) Double Declining Balance Method:

Depreciation per Year = Net Book Value X 2

Number of Years in useful Life
or, Dep. Per Year = (2 X SLR) × (Cost - Accumulated Dep.)

Straight Line Rate (SLR) = 100%

Number of Years Estimated Life
Normal declining rate = 100/4 = 25
Double Decline rate = 25% X 2 = 50%
Or Double decline balance method = {(1/n) X 100 X 2) = { (1/4) X 100 X 2 = 50 %
Dep. For the Year 2016 = (62,00,000 X 50% = Tk. 31,00,000
Dep. For the Year 2017 = (62,00,000-31,00,000) X 50% = Tk. 15,50,000
Dep. For the Year 2018 = (62,00,000-31,00,000 – 15,50,000) X 50% = Tk. 7,75,000
Dep. For the Year 2019 = (62,00,000-31,00,000 – 15,50,000 – 7,75,000) X 50% = Tk. 3,87,500
Or
Dep. For the Year 2019 = (62,00,000-31,00,000 – 15,50,000 – 7,75,000 – 3,87,500 ) = Tk. 3,87,500
 Salvage value will consider in the last year. So, this year depreciation would be Tk. 3,87,500.
Page 5 of 17
(iii) Units of activity (output) method:

Cost - Salvage Value

Depreciation per Unit
Estimated km will be run over the Assets
useful life
Depreciation per period = Dep. per unit X No. of hour used

Dep. per hour = (Tk. 70,50,000 – Tk. 50,000)/120,000 Kilometers = Tk. 58.3333

Table: Calculation of Depreciation under Unit of Production Method

Year Depreciation Depreciation Actual hour used in Depreciation

Base per Hours the year for the year
2016 24,000 Tk 14,00,000
2017 34,000 Tk 19,83,333
2018 70,00,000 58.3333 30,000 Tk 17,50,000
2019 20,000 Tk 11,66,667
2020 12,000 Tk. 7,00,000
Total 120,000 Tk. 70,00,000

Question No. 6 – c
From the following information, compute the cost of goods sold and the value of ending inventory under:
i) FIFO ii) LIFO iii) Weighted Average Cost Method:

June 01,
: Beginning inventory of 100 units @ Tk.10
2021

June 15,
: Purchase 200 units @ Tk.11
2021

June 24,
: Purchase 300 units @ Tk.12
2021

June 26,
: Sales 550 units @ Tk.18
2021

June 30,
: Purchase 440 units @ Tk.13
2021

Page 6 of 17
Solution: Under FIFO method:
Date Transactions Receive Issue Balance

Ref Qty. Rate Amt. Ref Qty Rate Amt Qty Rate Amt

2021

June, 01 Balance 100 10 1,000

June, 15 Purchase 200 11 2,200 100 10 1,000

200 11 2,200

June, 24 Purchase 300 12 3,600 100 10 1,000

200 11 2,200
300 12 3,600

June, 26 Sales 100 10 1,000

200 11 2,200 50 12 600
250 12 3,000

June, 30 Purchase 440 13 5,720

50 12 600
440 13 5,720

Purchase = 11,520 Cost of Goods 6,200 6,320

Sold =

Page 7 of 17
Under LIFO method:

Date Transactions Receive Issue Balance

Ref Qty. Rate Amt. Ref Qty Rate Amt Qty Rate Amt

2021

June, 0 Balance 100 10 1,000

June, 15 Purchase 200 11 2,200 100 10 1,000

200 11 2,200

June, 24 Purchase 300 12 3,600 100 10 1,000

200 11 2,200
300 12 3,600

June, 26 Sales 300 12 3,600

200 11 2,200 50 10 500
50 10 500

June, 30 Purchase 440 13 5,720

50 10 500
440 13 5,720

Purchase = 11,520 Cost of Goods 6,300 6,220

Sold =

Page 8 of 17
Under Weighted Average Method:

Date Transactions Receive Issue Balance

Ref Qty. Rate Amt. Ref Qty Rate Amt Qty Rate Amt

2021

June, 0 Balance 100 10 1,000

June, Purchase 200 11 2,200 100 10 1,000

15 200 11 2,200

Purchase 300 12 3,600 100 10 1,000

June, 200 11 2,200
24 300 12 3,600

Sales
550 11.33 6,233 50 10.33 567
June,
26
490 12.83 6,287
Purchase 440 13 5,720

June,
30

Purchase = 11,520 Cost of Goods 6,233 6,287

Sold =

Page 9 of 17
 Question No. 7
The Trail balance of M/S. Chemical Engineering Co. Ltd. as on June 30, 2021 is stated below:

M/S. Chemical Engineering Co. Ltd.

Trail Balance
As on June 30, 2021
Credit
Particulars Debit (Tk.)
(Tk.)

Paid up capital 10,00,000

Investment from banks 50,00,000

Cash in hand 20,000

Cash at bank 1,10,000

Land and building 38,00,000

Machinery 17,00,000

Inventory (Raw material-Tk.100,000, Work in Progress Tk.200,000, Finished

580,000
goods- Tk.280,000)

Sales 16,00,000

Purchases 200,000

Account receivable 200,000

Carriage inward 16,000

Account payable 126,000

Returns outward 9,000

Banks profit and charges 500,000

VAT on sales 5,000

Carriage outward 8,000

Wages 7,000

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 Other manufacturing cost 4,000

Office supplies 6,000

Salary 150,000

Returns inward 4,000

Furniture 302,000

Bad debts 3,000

Prepaid expenses 1,20,000

Total 77,35,000 77,35,000

Adjustments:
a) Opening inventory: Raw materials Tk. 300,000; Work in Progress Tk. 100,000; and Finished goods Tk.200,000.
b) Office supplies worth Tk.1000 was unused. c) Depreciation on Machinery 20% per annum. d) Provision for bad
debts Tk.5000.
Required :
a) Prepare an Income Statement for the year 2020-2021. b) Prepare the Balance Sheet as on June 30, 2021.

Page 11 of 17
Solution:

M/S. Chemical Engineering Co. Ltd.

Income Statement for the year June 30, 2021

Income & Expenditure Amount Amount Amount

in Taka in Taka in Taka
Sales 16,00,00
Less: Return Inwards 0
Less: VAT on sales (4,000)
(5,000) 15,91,000
Net Sales
Purchase 2,00,000
Add: Opening Inventory (No entry, as it is mentioned in adjustments) -
Less: Return Outward (9,000) (191,000)
Net Purchase (16,000)
Less: Carriage inward (7,000)
Less: Wages (4,000)
Less: Other Manufacturing Cost -
Less: Closing Inventory (It would be accounted for as Balance Sheet (2,18,000)
item only)
Cost of Goods Sold
Gross Profit / Total Operating Income 13,73,000
Operating Expenses:
Salary 1,50,000
Carriage Outward 8,000
5,000
Office Supplies (Total 6,000 – Less Unused 1,000)
3,40,000
Depreciation @ 20 % on Machinery 8,000
Bad Debts (During the Year 3,000 + Provision 5,000) 5,00,000
Bank Profit and Charges (10,11,000
Total Operating Expenses )

Net Profit from Operation 3,62,000

Non- operating income: -
Share of profit on deposit -

Profit/(Loss) before Taxes 3,62,000

Provision for Income Tax (Assume that company’s tax rate is 40%) (1,44,800)
Net Profit /(Loss) after Tax 2,17,200

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 M/S. Chemical Engineering Co. Ltd.
Balance Sheet as at June 30, 2021

PROPERTY AND ASSETS Amount Amount

(in Taka) (in Taka)
Current Assets:
Cash in Hand 20,000
Cash at Bank 1,10,000
Closing Inventory ( RM-3,00,000 + WIP-100,000+ FG – 200,000) 5,80,000
Accounts Receivable 2,00,000
Unused Office Supplies 1,000
Prepaid Expenses 1,20,000 10,31,000

Fixed Assets & Other Assets:

Land and Building 38,00,000
Machinery Tk.
17,00,000 13,60,000
Less: Depreciation @ 20% Tk. 3,02,000 54,62,000
(3,40,000)
Furniture

Total Assets 64,93,000

LIABILITIES AND CAPITAL

Liabilities:
Investment form Bank 50,00,000

Accounts Payable 1,26,000

Provision for Bad Debt 5,000
Provision for Income Tax 1,44,800
Total Liabilities 52,75,800
Capital/Shareholders’ Equity:
Paid up Capital 10,00,000
Retained Earnings 2,17,200
Total Shareholders’ Equity 12,17,200
Total Liabilities & Shareholders’ Equity 64,93,000

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 Question No. 8

The Baraka Islamic Bank Ltd. has provided the following Trail balance and additional information as at
December 31,2020:

The Baraka Islamic Bank Ltd.

Trial Balance
As at December 31, 2020

Particulars Debit (Tk.) Credit(Tk.)

Al Wadeah Current Deposit and Others 21,420

Auditors fee 9,000

Balance of Profit and Loss account 8,500

Balance with Bangladesh Bank 54,000

Balance with other Bank 83,000

Bills payable 43,230

Bills purchased & discounted 7500

Cash in hand 23,350

Charges on Investment Losses 150

CEO’s salary & fees 15,000

Commission, Exchange & Brokerage 30,300

Director’s fees and expenses 6200

General Investment 4,05000

Income from Investment in Securities 47,000

Investment in Government Securities 155,000

Investment income 101,000

Legal expenses 1140

Placement with bank and other Financial Institutions

31,000
(Money at call and short notice)

Mudaraba Savings Deposit 32,950

Mudaraba Term Deposit 85,900

Non-banking assets 7,000

Other assets 44,750

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 Other expenses 7,000

Other Mudaraba Deposit 25,200

Other operating income 14,840

Paid up capital (5,000 Shares @Tk.100) 5,00,000

Postage, Stamps and Telecommunication 6,250

Premises and fixed assets 105,000

Profit paid to depositors 29,950

Rent, Taxes, Insurance & Electricity 10,000

Repair to bank assets 3,250

Salaries & allowances 52,000

Share premium account 90,000

Shariah Supervisory Committee fees and expenses 2,500

Stationery, Printing & Advertisement 9,000

Statutory reserve 71,700

Zakat expenses 5,000

Total 10,72,040 10,72,040

Additional Information:
i) Provision for investment Tk.1320 and provision for other asset Tk.840.
ii) Provide depreciation to bank’s fixed assets Tk.10,500.
iii) Provision for taxes is estimated at Tk.14,000.

Required:
a) Prepare a Profit and Loss Account for the year ended December 31, 2020; and
b) Prepare a Balance Sheet as at December 31, 2020.

Page 15 of 17
Solution:
The Baraka Islamic Bank Ltd.
Profit and Loss Account for the year ended December 31, 2020
Income & Expenditure Amount in Amount in
‘000 Taka ‘000 Taka
Investment Income 1,01,000
Profit paid to Depositors (29,950)
Net Investment Income 71,050

Income from Investment in Securities 47,000

Commission, Exchange and Brokerage 30,300
Other Operating Income 14,840
Charges on Investment Loss (150) 91,990

Total Operating Income 1,63,040

Operating Expenses:
Salary & allowances 52,000
CEO’s Salary & Fees 15,000
Auditors Fee 9,000
Legal Expenses 1,140
Directors’ Fees and Expenses 6,200
Postage, Stamps and Telecommunications 6,250
Rent, Taxes, Insurance and Electricity 10,000
Repair to bank assets 3,250
Shariah Supervisory Committee Fees & Expenses 2,500
Stationery, Printing and Advertisement 9,000
Zakat Expenses 5,000
Depreciation on Bank’s Fixed Assets (Premises and Fixed Assets) 10,500
Other Expenses 7,000
Total Operating Expenses 1,36,840
Profit /(Loss) before provision against Classified Investment 26,200
Provision for Investments 1,320
Provision for other assets 840
Provision for diminution in value of Investments in Shares -
Other Provisions 0
Total Provision 2,160
Total Profit/ (Loss) before Taxes 24,040
Provision for Tax (Current Tax plus Deferred Tax, if any) 14,000
Net Profit/ (Loss) after Tax 10,040
Retained Earnings from Previous Year 8,500
Add: Net Profit after Tax 10,040
Profit Available for Distribution 18,540
Less: Appropriations
Statutory Reserve 4,808
General Reserve
Proposed Dividends
Retained Earnings 13,732
Earnings per Ordinary Share (EPS)

 Statutory Reserve (PBT 24,040 @ 20%) = Tk. 4,808.

Page 16 of 17
 The Popular Islamic Bank Ltd.
Balance Sheet as at December 31, 2020

PROPERTY AND ASSETS Amount Amount

(in Taka) (in Taka)

Cash in hand 23,350

Placement with bank and other Financial Institutions ( Money at call and short notice) 31,000
Balance with Bangladesh Bank 54,000
Balance with Other Bank 83,000
Investments in Government Securities 1,55,000
General Investment 4,05,000
Bill purchased & Discounted 7,500

Premises and Fixed Assets ( Tk. 1,05,000 – Tk. 10,500) 94,500

Other Assets 44,750
Non-Banking Assets 7,000
Total Assets 9,05,100

LIABILITIES AND CAPITAL

Liabilities:
Deposits and Other Accounts
Al-Wadeeah Current Deposits 21,420
Mudaraba Savings Deposits 32,950
Mudraba Term Deposits 85,900
Other Mudaraba Deposits 25,200 1,65,470
Other Liabilities
Bills Payable 43,230
Provision for Investment 1,320
Provision for other Assets 840
Provision for Income Tax 14,000 59,390
Total Liabilities 2,24,860

Capital/Shareholders’ Equity:
Paid up capital (5,000 shares @ Tk100 each) 5,00,000
Share Premium Account 90,000
Statutory Reserve (71,700 + 4,808) 76,508
General Reserves -
Retained Earnings 13,732
Total Shareholders’ Equity 6,80,240
Total Liabilities & Shareholders’ Equity 9,05,100

The End

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