P.2-3 The following trial balance for the year ended 30 June, 2019 was extracted from the accounting record of Ashar Construction Company: Particular Debit Credit Cash Account Rs. 228,000 Equipment and Machinery 265,600 Accounts receivable 101,100

To accomplish the tasks required, we will first prepare the adjusting accounting entries based on the adjustments mentioned. Then, we will present the unadjusted trial balance, adjustments, and the adjusted trial balance. Finally, we will prepare the financial statements as requested.

### a) Adjusting Accounting Entries

1. **Depreciation on Equipment and Machinery and Motor Vehicle (10%)**
   - **Equipment and Machinery Depreciation**: 
     \[
     \text{Depreciation expense} = 265,600 \times 10\% = 26,560
     \]
     - **Entry**: 
       \[
       \text{Debit Depreciation Expense} Rs. 26,560 
       \]
       \[
       \text{Credit Accumulated Depreciation - Equipment} Rs. 26,560
       \]
   - **Motor Vehicle Depreciation**: 
     \[
     \text{Depreciation expense} = 260,000 \times 10\% = 26,000
     \]
     - **Entry**: 
       \[
       \text{Debit Depreciation Expense} Rs. 26,000 
       \]
       \[
       \text{Credit Accumulated Depreciation - Motor Vehicle} Rs. 26,000
       \]

2. **Supplies Adjustment**:
   - **Supplies used**:
   \[
   \text{Supplies Expense} = 10,000 - 6,400 = 3,600
   \]
   - **Entry**:
     \[
     \text{Debit Supplies Expense} Rs. 3,600 
     \]
     \[
     \text{Credit Supplies} Rs. 3,600
     \]

3. **Construction Fee Adjustment**:
   - **Entry**:
     \[
     \text{Debit Construction Fee} Rs. 20,000 
     \]
     \[
     \text{Credit Unearned Revenue} Rs. 20,000
     \]

4. **Outstanding Wages**:
   - **Entry**:
     \[
     \text{Debit Wages Expense} Rs. 15,000 
     \]
     \[
     \text{Credit Wages Payable} Rs. 15,000
     \]

5. **Rent Expenses Adjustment (Prepaid Rent)**:
   - **Entry**:
     \[
     \text{Debit Prepaid Rent} Rs. 4,000 
     \]
     \[
     \text{Credit Rent Expense} Rs. 4,000
     \]

### b) Unadjusted Trial Balance, Adjustments, and Adjusted Trial Balance

#### Unadjusted Trial Balance
| Particulars                      | Debit (Rs.) | Credit (Rs.) |
|-----------------------------------|-------------|--------------|
| Cash Account                       | 228,000     |              |
| Equipment and Machinery            | 265,600     |              |
| Accounts Receivable                | 101,100     |              |
| Supplies                           | 10,000      |              |
| Accounts Payable                   |             | 18,000       |
| Capital Account                    |             | 650,000      |
| Drawings Accounts                  | 25,000      |              |
| Construction Fee                   | 320,000     |              |
| Wages Expenses                     | 45,000      |              |
| Interest Expenses                  | 6,000       |              |
| Rent Expenses                      | 24,000      |              |
| Property Tax                       | 8,500       |              |
| Repair and Maintenance Expenses     | 6,500       |              |
| Utilities Expenses                 | 8,300       |              |
| Motor Vehicle                      | 260,000     |              |
| Total                             | 988,000     | 988,000      |

#### Adjustments
1. Depreciation Expense - Equipment: Rs. 26,560
2. Depreciation Expense - Motor Vehicle: Rs. 26,000
3. Supplies Expense: Rs. 3,600
4. Unearned Revenue: Rs. 20,000
5. Wages Payable: Rs. 15,000
6. Prepaid Rent: Rs. 4,000

#### Adjusted Trial Balance
| Particulars                      | Debit (Rs.)  | Credit (Rs.) |
|-----------------------------------|--------------|---------------|
| Cash Account                       | 228,000      |               |
| Equipment and Machinery            | 265,600      |               |
| Accounts Receivable                | 101,100      |               |
| Supplies                           | 6,400        |               |
| Accounts Payable                   |              | 18,000        |
| Capital Account                    |              | 650,000       |
| Drawings Accounts                  | 25,000       |               |
| Construction Fee                   | 300,000      |               |
| Wages Expenses                     | 60,000       |               |
| Interest Expenses                  | 6,000        |               |
| Rent Expenses                      | 20,000       |               |
| Property Tax                       | 8,500        |               |
| Repair and Maintenance Expenses     | 6,500        |               |
| Utilities Expenses                 | 8,300        |               |
| Motor Vehicle                      | 260,000      |               |
| Depreciation Expense               | 52,560       |               |
| Wages Payable                      |              | 15,000        |
| Unearned Revenue                   |              | 20,000        |
| Prepaid Rent                       | 4,000        |               |
| **Total**                         | **988,000**  | **988,000**   |

### c) Financial Statements

1. **Income Statement for the Year Ended 30 June 2019**

```
Ashar Construction Company
Income Statement
For the Year Ended 30 June 2019

Revenue:
  Construction Fees                     Rs. 300,000
Total Revenue                          Rs. 300,000

Expenses:
  Wages Expenses                         Rs. 60,000
  Rent Expenses                          Rs. 20,000
  Property Tax                           Rs. 8,500
  Interest Expenses                      Rs. 6,000
  Utilities Expenses                     Rs. 8,300
  Repair & Maintenance Expenses          Rs. 6,500
  Supplies Expenses                      Rs. 3,600
  Depreciation Expense                   Rs. 52,560
Total Expenses                          Rs. 172,460

Net Income                               Rs. 127,540
```

2. **Statement of Change in Equity for the Year Ended 30 June 2019**

```
Ashar Construction Company
Statement of Changes in Equity
For the Year Ended 30 June 2019

Opening Capital Account                                 Rs. 650,000
Add: Net Income                                         Rs. 127,540
Less: Drawings                                          Rs. 25,000
Closing Capital Account                                Rs. 752,540
```

3. **Balance Sheet as at 30 June 2019**

```
Ashar Construction Company
Balance Sheet
As at 30 June 2019

Assets
Current Assets:
  Cash                                          Rs. 228,000
  Accounts Receivable                           Rs. 101,100
  Supplies                                      Rs. 6,400
  Prepaid Rent                                  Rs. 4,000
Total Current Assets                           Rs. 339,500

Non-current Assets:
  Equipment and Machinery (Net)                Rs. 239,040
  Motor Vehicle (Net)                           Rs. 234,000
Total Non-current Assets                        Rs. 473,040
Total Assets                                    Rs. 812,540

Liabilities
Current Liabilities:
  Accounts Payable                              Rs. 18,000
  Wages Payable                                  Rs. 15,000
  Unearned Revenue                               Rs. 20,000
Total Current Liabilities                       Rs. 53,000

Equity
  Capital Account                                Rs. 752,540
Total Liabilities and Equity                    Rs. 812,540
```

4. **Cash Flows Statement for the Year Ended 30 June 2019**

```
Ashar Construction Company
Cash Flows Statement
For the Year Ended 30 June 2019

Cash Flows from Operating Activities
Net Income                           Rs. 127,540
Adjustments for non-cash items:
  Depreciation Expense               Rs. 52,560
Change in Working Capital:
  Increase in Accounts Receivable    Rs. (101,100)
  Decrease in Supplies               Rs. 3,600
  Increase in Prepaid Rent           Rs. (4,000)
  Increase in Accounts Payable       Rs. 18,000
  Increase in Wages Payable          Rs. 15,000
  Increase in Unearned Revenue       Rs. 20,000
Net Cash Flows from Operating Activities  Rs. 131,600

Net Cash Flows from Investing Activities               Rs. 0
Net Cash Flows from Financing Activities               Rs. 0

Net Increase in Cash                        Rs. 131,600
Cash at Beginning of Year                   Rs. 228,000
Cash at End of Year                         Rs. 359,600
```

### Note:
- The figures above depend upon the accuracy of the provided information. The calculations may vary if there are different assumptions regarding initial amounts or classifications used in the trial balance. Adjust as necessary based on actual records and further information.

Update (2024-09-29):
To prepare the financial statements for Ashar Construction Company for the year ended 30 June 2019, we need to make adjustments based on the provided information. Here's how to process each adjustment:

### 1. Calculation of Depreciation
- **Depreciation on Equipment and Machinery**: 
  - Rs. 265,600 * 10% = Rs. 26,560
- **Depreciation on Motor Vehicle**: 
  - Rs. 260,000 * 10% = Rs. 26,000
- **Total Depreciation**: Rs. 26,560 + Rs. 26,000 = Rs. 52,560

### 2. Adjust Supplies
- **Supplies Available**: Rs. 6,400
- **Supplies Used**: Rs. 10,000 (total supplies) - Rs. 6,400 (remaining supplies) = Rs. 3,600 (used)
  
### 3. Construction Fee Adjustment
- Since Rs. 20,000 is for services not rendered, it must be deducted from sales:
- **Adjusted Sales**: Rs. 320,000 - Rs. 20,000 = Rs. 300,000

### 4. Outstanding Wages
- Additional wages of Rs. 15,000 need to be recorded as a wage expense.
  
### 5. Rent Expense Adjustment
- Rs. 4,000 of the total rent needs to be reclassified as a prepaid expense for future periods (July and August 2019).
- **Adjusted Rent Expense**: Rs. 24,000 - Rs. 4,000 = Rs. 20,000 

### Adjusted Trial Balance
Now, let's update the trial balance with these adjustments.

#### Adjusted Trial Balance

| Particular                | Debit (Rs.) | Credit (Rs.) |
|---------------------------|--------------|---------------|
| Cash Account               | 228,000      |               |
| Equipment and Machinery    | 265,600      |               |
| Accounts Receivable        | 101,100      |               |
| Supplies                   | 10,000       |               |
| Accounts Payable           |              | 18,000        |
| Capital Account            |              | 650,000       |
| Drawings Account           | 25,000       |               |
| Sales                      |              | 300,000       |
| Wages Expenses             | 45,000 + 15,000 = 60,000 |               |
| Interest Expenses          | 6,000        |               |
| Rent Expenses              | 20,000       |               |
| Property Tax               | 8,500        |               |
| Repair and Maintenance     | 6,500        |               |
| Utilities Expenses         | 8,300        |               |
| Motor Vehicle              | 260,000      |               |
| Depreciation Expense       | 52,560       |               |
| **Total**                 | **1,024,560** | **1,024,560** |

### Final Notes
- The trial balance now reflects all adjustments for proper reporting for Ashar Construction Company for the year ended 30 June 2019.
- Ensure to reflect these adjusted figures in the income statement and balance sheet as needed. The net income can be calculated by summarizing the adjusted revenues and expenses.

Update (2024-09-29):
To prepare the adjusted trial balance for Ashar Construction Company as of June 30, 2019, we will first calculate each of the adjustments and then update the trial balance accordingly.

### Adjustments:

a) **Depreciation on Equipment and Machinery and Motor Vehicle**
- Equipment and Machinery: \( 265,600 \times 10\% = 26,560 \)
- Motor Vehicle: \( 260,000 \times 10\% = 26,000 \)
- Total Depreciation = \( 26,560 + 26,000 = 52,560 \)

b) **Supplies Adjustment**
- Supplies on hand: \( 10,000 - 6,400 = 3,600 \) (which is the supplies expense)
- Supplies Expense = \( 10,000 - 6,400 = 3,600 \)

c) **Construction Fee Adjustment**
- Reduce Revenue: Rs. 20,000 (this amount is not earned yet)

d) **Outstanding Wages**
- Wages Expense increases by Rs. 15,000

e) **Rent Expense Adjustment**
- Prepaid Rent: Rs. 4,000 (for July and August), so reduce Rent Expense by Rs. 4,000

### Summary of Adjustments:
- Depreciation Expense: +Rs. 52,560
- Supplies Expense: +Rs. 3,600
- Revenue Reduction: -Rs. 20,000
- Wages Expense: +Rs. 15,000
- Rent Expense Reduction: -Rs. 4,000

### Adjusted Trial Balance:
Now, we will update the accounts accordingly.

1. **Cash Account**: Rs. 228,000 (no change)
2. **Equipment and Machinery**: Rs. 265,600 (no change)
3. **Motor Vehicle**: Rs. 260,000 (no change)
4. **Accounts Receivable**: Rs. 101,100 (no change)
5. **Supplies**: 
   - Original: Rs. 10,000
   - Adjusted: Rs. 6,400 
6. **Accounts Payable**: Rs. 18,000 (no change)
7. **Capital Account**: Rs. 650,000 (no change)
8. **Drawings Account**: Rs. 25,000 (no change)
9. **Sales**:
   - Original: Rs. 320,000
   - Adjusted: Rs. 300,000 
10. **Wages Expense**: 
    - Original: Rs. 45,000 
    - Adjusted: Rs. 60,000
11. **Interest Expense**: Rs. 6,000 (no change)
12. **Rent Expense**: 
    - Original: Rs. 24,000 
    - Adjusted: Rs. 20,000
13. **Property Tax**: Rs. 8,500 (no change)
14. **Repair and Maintenance Expenses**: Rs. 6,500 (no change)
15. **Utilities Expenses**: Rs. 8,300 (no change)

### Adjusted Figures:
After considering the adjustments, the revised figures are:

| **Particulars**               | **Debit (Rs.)** | **Credit (Rs.)** |
|-------------------------------|------------------|------------------|
| Cash Account                  | 228,000          |                  |
| Equipment and Machinery       | 265,600          |                  |
| Motor Vehicle                 | 260,000          |                  |
| Accounts Receivable           | 101,100          |                  |
| Supplies                      | 6,400            |                  |
| Accounts Payable              |                  | 18,000           |
| Capital Account               |                  | 650,000          |
| Drawings Account              | 25,000           |                  |
| Sales                         |                  | 300,000          |
| Wages Expenses                | 60,000           |                  |
| Interest Expenses             | 6,000            |                  |
| Rent Expenses                 | 20,000           |                  |
| Property Tax                  | 8,500            |                  |
| Repair and Maintenance Expense | 6,500            |                  |
| Utilities Expenses            | 8,300            |                  |
| **Total**                    | **999,400**      | **999,400**      |

The adjusted trial balance now balances at Rs. 999,400 on both the Debit and Credit sides.

Update (2024-09-29):
To complete the requirements for Ashar Construction Company based on the provided information, we will follow a systematic approach, addressing each part step-by-step.

## Part A: Adjusting Accounting Entries

1. **Depreciation on Equipment and Machinery and Motor Vehicle**:
   - Equipment & Machinery: Rs. 265,600 × 10% = Rs. 26,560
   - Motor Vehicle: Rs. 260,000 × 10% = Rs. 26,000
   - **Journal Entry**:
     - Debit: Depreciation Expense (Equipment & Machinery) Rs. 26,560
     - Debit: Depreciation Expense (Motor Vehicle) Rs. 26,000
     - Credit: Accumulated Depreciation (Equipment & Machinery) Rs. 26,560
     - Credit: Accumulated Depreciation (Motor Vehicle) Rs. 26,000

2. **Supplies Adjustment**:
   - Total Supplies: Rs. 10,000
   - Supplies used: Rs. 10,000 - Rs. 6,400 = Rs. 3,600 
   - **Journal Entry**:
     - Debit: Supplies Expense Rs. 3,600
     - Credit: Supplies Rs. 3,600

3. **Adjust Sale for Unrendered Services**:
   - **Journal Entry**:
     - Debit: Sales Returns and Allowances Rs. 20,000
     - Credit: Unearned Revenue Rs. 20,000

4. **Outstanding Wages**:
   - **Journal Entry**:
     - Debit: Wages Expense Rs. 15,000
     - Credit: Wages Payable Rs. 15,000

5. **Adjust Rent Expense for Prepaid Rent**:
   - Rent Adjustment: Rs. 4,000
   - **Journal Entry**:
     - Debit: Prepaid Rent Rs. 4,000
     - Credit: Rent Expense Rs. 4,000

## Part B: Unadjusted Trial Balance, Adjustments, and Adjusted Trial Balance

### Unadjusted Trial Balance
| Particular               | Debit (Rs.) | Credit (Rs.) |
|-------------------------|-------------|--------------|
| Cash Account            | 228,000     |              |
| Equipment and Machinery  | 265,600    |              |
| Accounts Receivable     | 101,100     |              |
| Supplies                | 10,000      |              |
| Accounts Payable        |             | 18,000       |
| Capital Account         |             | 650,000      |
| Drawings Account        | 25,000      |              |
| Sales                   |             | 320,000      |
| Wages Expenses          | 45,000      |              |
| Interest Expenses       | 6,000       |              |
| Rent Expenses           | 24,000      |              |
| Property Tax            | 8,500       |              |
| Repair & Maintenance    | 6,500       |              |
| Utilities Expenses      | 8,300       |              |
| Motor Vehicle           | 260,000     |              |
| **Total**              | 988,000     | 988,000      |

### Adjustments
1. Depreciation (Total: Rs. 52,560)
2. Supplies Expense: Rs. 3,600
3. Sales Accounts: Reduce Sales by Rs. 20,000
4. Outstanding Wages: Rs. 15,000
5. Prepaid Rent: Rs. 4,000

### Adjusted Trial Balance
| Particular                 | Debit (Rs.) | Credit (Rs.) |
|---------------------------|-------------|--------------|
| Cash Account              | 228,000     |              |
| Equipment and Machinery    | 265,600     |              |
| Accounts Receivable       | 101,100     |              |
| Supplies                  | 6,400       |              |
| Accounts Payable          |             | 18,000       |
| Capital Account           |             | 650,000      |
| Drawings Account          | 25,000      |              |
| Sales                     |             | 300,000      |  (after adjustments)
| Wages Expenses            | 60,000      |              |   (after adjustments)
| Interest Expenses         | 6,000       |              |
| Rent Expenses             | 20,000      |              |   (after adjustments)
| Property Tax              | 8,500       |              |
| Repair & Maintenance      | 6,500       |              |
| Utilities Expenses        | 8,300       |              |
| Motor Vehicle             | 260,000     |              |
| **Total**                | 992,400     | 992,400      |

## Part C: Financial Statements

### 1. Income Statement for the year ended 30 June 2019
| Description               | Amount (Rs.) |
|---------------------------|--------------|
| **Revenue**               |              |
| Sales                     | 300,000      |
| **Expenses**              |              |
| Wages Expenses            | 60,000       |
| Depreciation Expense      | 52,560       |
| Interest Expense          | 6,000        |
| Rent Expense              | 20,000       |
| Property Tax              | 8,500        |
| Repair & Maintenance      | 6,500        |
| Utilities Expenses        | 8,300        |
| Supplies Expense          | 3,600        |
| **Total Expenses**        | 165,460      |
| **Net Income**           | 134,540      |

### 2. Statement of Change in Equity for the year ended 30 June 2019
| Description                        | Amount (Rs.) |
|------------------------------------|--------------|
| Opening Capital                    | 650,000      |
| Add: Net Income                    | 134,540      |
| Less: Drawings                     | (25,000)     |
| **Closing Capital**                | 759,540      |

### 3. Balance Sheet as of 30 June 2019
| Assets                          | Amount (Rs.)   |
|---------------------------------|-----------------|
| **Current Assets**              |                 |
| Cash                            | 228,000         |
| Accounts Receivable             | 101,100         |
| Supplies                        | 6,400           |
| **Non-Current Assets**          |                 |
| Equipment & Machinery           | 265,600         |
| Motor Vehicle                   | 260,000         |
| Less: Accumulated Depreciation  | (52,560)        |
| **Total Assets**                | 829,540         |

| Liabilities                     | Amount (Rs.)   |
|---------------------------------|-----------------|
| **Current Liabilities**         |                 |
| Accounts Payable                | 18,000          |
| Wages Payable                   | 15,000          |
| **Total Liabilities**           | 33,000          |

| Owner's Equity                  | Amount (Rs.)   |
|---------------------------------|-----------------|
| Capital Account                 | 759,540         |
| Drawings                        | (25,000)        |
| **Total Equity**                | 759,540         |

### 4. Cash Flow Statement for the year ended 30 June 2019
| Description                        | Amount (Rs.)   |
|-----------------------------------|-----------------|
| **Cash Flows from Operating Activities** |          |
| Cash Receipts from Customers      | Add sales: 300,000 |
| Cash Payments to Suppliers and Employees | (Wages, Expenses, etc.) -165,460 |
| **Net Cash from Operating Activities** | 134,540  |
| **Net Increase in Cash**          | 134,540        |
| Cash at Beginning                  | 228,000        |
| **Cash at End**                   | 362,540        |

This structure captures the necessary entries, adjustments, and financial statements requested. Be sure to check the consistency of values and amounts in the Trial Balance, Income Statement, and Balance Sheet when inputting into your accounting system or documents.