ALHAMD ISLAMIC UNIVERSITY Islamabad Campus  FINAL TERM EXAMINATION SUMMER-2020 (Repeat) BBA Fundamental of Accounting Max Marks:40 Question 1: O’Connell’s Air Service operates several small airplanes providing passenger and freight service to small towns

ALHAMD ISLAMIC UNIVERSITY Islamabad Campus

 FINAL TERM EXAMINATION SUMMER-2020 (Repeat)

BBA

Fundamental of Accounting

Max Marks:40

Question 1:

O’Connell’s Air Service operates several small airplanes providing passenger and freight service to small towns. Oil fields fishing lodges and other remote locations in Alaska. The company adjusts and closes its accounts at the end of each month. At April 30, the following trial balance was prepared from the ledger.

Other Data:

1. One of O’Connell’s regular customers is Yukon Oil Company. The airline keeps track of the number of

                         trips carrying freight for the oil company and sends a bill shortly after month end. No entry has yet

                         been made in the airline’s accounting records to record $11,750 freight revenue earned in April

                         form Yukon Oil Company.

2. Three months’ rent $8,100 had been prepaid on April 1.
3. On January 1, a 12-month insurance policy had been purchased for $49,200.
4. O’Connell’s depreciates its airplanes over a period of 15 years (180 months).
5. Accrued interest on notes payable amounts to $4,500 at April 30 and has not yet been recorded.
6. The amount shown as unearned passenger revenue represents the price of tickets sold to customers

    In advance of flights. During April, $94,750 of this amount was earned by the airline.

7. Salaries earned by airline employees but not yet recorded or paid amount to $1,625 at April 30.

Required:  Prepare a 10-column work sheet using the trial balance and adjusting data provided. Include at the

                      Bottom of the work sheet a brief explanation keyed to each adjusting entries.                       (20)

Question 2:

A number of business transactions carried out by Green River Frame are shown below:

1. The owner invested cash in the business.
2. Purchased a computer on credit
3. Purchased office equipment for cash.
4. Purchased small office building for cash and credit both.
5. Collected notes receivables.
6. Sold land for cash at a price equal to its cost.
7. Borrowed money from bank.
8. Paid a lability.
1. Received cash from computer store.
10. Owner’s drawing.

Instructions: Indicate the effects of each of these transactions upon the total amounts of the company’s assets, liabilities and owner’s equity. Organize your answer in tabular form using the column headings shown below and the code letters I for increase, D for decrease and NE for no effect.                                                                                                                                       (20)