ACCTG1B

MIDTERM EXAMINATION
ACCRUALS & DEFERRALS

PART 1: ACCRUALS

ACCRUED EXPENSES:
Based on the following data, prepare the necessary adjusting entries on December 31, 2019.
Support your entries with the needed computation

1. salaries already earned by the Salaries expense P 90,000

Salaries payable P 90,000
employees but not yet paid as of
December 31, P 90,000

Interest expense 140, 000

2. A 6-month, 10% note payable for interest payable 140, 000
350,000 x .12 x 20/6 = 140, 000
P350, 000, dated October 1, is
outstanding as of December 31.

Utilities expense 6,000

3. utilities already incurred but not Utilities payable 6,000
yet paid P 6,000
PART 2: PRECOLLECTION

ACCRUED INCOME

Transactions Adjusting entry

December 31

1. The Notes Receivable account

Interest receivable P4,500
has a balance of P450,000
interest income P 4,500
representing a
120-day, 12% note received on
December 1. The Interest on the 450, 000 x .12 x 30/360= P 4,500
note is collectible upon
maturity.

2. Rent due and uncollected from

Rent receivable 50,000
the tenants for the month of
rent income 50,000
December, P 50,000

3. A 180-day, 9% note receivable Interest receivable 2, 310

for P220,000, dated December Interest income 2, 310
21, is outstanding as at 220,000 x .09 x 21/180= 2, 310
December 31
PART 3

PRECOLLECTED INCOME

Based on the following data, prepare the entries

1. upon receipt of cash and

2. The necessary adjusting entries at the end of the current calendar
year
1. On November 1, Rent Income 125,000
Unearned Rent Cash 150,000 Unearned rent income
Income was credited Rent Income 150,000
for p150,000 125,000
representing rental unearned=150,000 x 10/12
for 12 months = 125,000

2. On November 1,
2019 , Atty. Mijares Retainer’s fees 10,000
received P60,000 as Unearned retainer’s fees
her retainer’s fees for Cash 60,000
professional services Retainer’s fees 10,000
which was credited 60,000
to Unearned Unearned=30,000 x
retainer’s fees to be 1/3=10,000
rendered until April
30, 2020

3. Mina Creative Arts

received P 240,000 cash 240,000 service fees 90, 000
from a customer service fees 240,000 unearned service fees 90, 000
representing
advertising fees for
a period of 24 unearned= 240,000 x 9/24=
months beginning 90, 000
October 1, 2019
 PART 4
PREPAYMENTS

Based on the following data, prepare the entries upon receipt of cash and
necessary adjusting entries at the end of the current calendar year
Interest Upon Payment Of ADJUSTING ENTRY, December
Cash 31, 2019

1. Interest paid on bank

loan, debited to Interest expense 900 Prepaid interest 600
prepaid interest Cash 900 Interest expense 600
expense account , for
the period of 60 days
from December 11, prepaid= 900 x 40/60
amounted to P 900 = 600

2. Store supplies debited

to the store supplies Prepaid store supplies Store sup. expense 17,250
account during the 28, 750 Prepaid store supplies 17,250
year, P28, 950. As of
December 31, Cash 28, 750
P11,500 is used expense= 28,750-11,500
= 17,250

3. Of the P12,000
balance of the Insurance expense
insurance expense 12,000 Prepaid insurance 3,000
account, P9,000 was Insurance expense 3,000
unexpired during the Cash 12,000
prepaid= 12,000-9,000
current year =3,000