Reference no: EM132545172
ESAAC is a shariah advisory company Headquartered in Karachi, Pakistan, providing shariah consultancy services to many individuals and companies for the compliance of their business operations with Islamic Shariah. Some clients pay in advance for services; others are billed after services have been performed. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2019, follows whereas adjusting entries have already been made for the first 11 months of 2019.
Additional Data
1. Accrued but unrecorded client fees earned at December 31 amount to PKR 30,000.
2. Records show that PKR 50,000 of cash receipts originally recorded as Unearned Retainers fee had been earned as of December 31.
3. Office supplies on hand at December 31 amount to PKR 2,200.
5. On October 1, 2019, the company renewed its rental agreement paying PKR 36,000 cash for six months' rent in advance.
6. On March 1 of the current year, the company paid PKR 21,600 cash to renew its 12-month Takaful policy.
7. Accrued but unrecorded salaries at December 31 amount to PKR 38,000.
8. On June 1, 2019, the company entered in a Murabaha (Cost plus mark up) sale transaction with Meezan Bank Limited for its office equipment. Cost price of the equipment is PKR 18,000 while the profit rate applied is 8% to be paid in 12 months. The entire amount, is due on May 31, 2020.
9. Estimated income tax for the whole year amounts to PKR 15,000.
ESSAC ADVISORY COMPANY
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2019
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .PKR80,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,585
Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,100
Prepaid rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,400
Unexpired insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,800
Office equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108,000
Accumulated depreciation: office equipment . . . . . . . . . . . . . . . . .PKR 1,500
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,800
Mark up payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .720
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,630
Unearned retainer fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3,500
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30,000
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92,790
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Client fees earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120,000
Office supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183
Depreciation expense: office equipment. . . . . . . . . . . . . . . . . . . . . .8,252
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6,000
Takaful expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,800
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27,100
Markup expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .720
Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$252,940
Required:
Question a. Make adjusting entries for the above transactions and unadjusted trial balance including explanation.
Question b. Prepare the company's adjusted trial balance dated December 31, 2019.
Question c. Using figures from the adjusted trial balance prepared in b, Prepare Income Statement and Statement of Financial position of ESSAC comapany