Midterm Quiz 01 - Adjusting Entries From Accrual To Provision For Uncollectible Accounts

MIDTERM QUIZ 01 – ADJUSTING ENTRIES FROM ACCRUAL TO PROVISION FOR UNCOLLECTIBLE ACCOUNTS
Instruction : Prepare journal entries on the date the transactions occur and adjusting entries on December 31, 2019.
1. On MARCH 1, 2019, the business borrowed P 500,000 at 8 % payable 2 year after. The interest was deducted in advance , and
the company debited prepaid interest on the date of borrowings.
Journal entry adjusting entry
Cash 420,000 Interest expense 33,333
Prepaid interest 80,000 Prepaid interest 33,333
Notes payable 500,000
2. Supplies was debited at the time of the purchase amounting to P 43,000. On December 31,2019, P 4,500 of supplies unused.
Supplies 43,000 Supplies expense 38,500
Cash 43,000 Supplies 38,500
3. Unearned rent income account has a balance of P 170,000 as of December 31, 2019. An amount of P 86,000 is applicable for
January, 2020.
Cash 170,000 Unearned rent income 84,000
Unearned rent income 170,000 Rent income 84,000
4. The business received a 24 months, 10% note from customer on October 1, 2019 amounting to P 86,000 for services rendered.
Notes Receivable 86,000 Interest Receivable 2,150 ( 86,000 x 10% x 3/12)
Service Income 86,000 Interest income 2,150
5. OCTOBER 1 , 2019, borrowed P 350,000 from a multipurpose cooperative on a 18-months, 8% per annum note payable. The
principal plus interest is payable at the end of the term.
Cash 350,000 Interest Expense 7,000 ( 350,000X8%X 3/12)
Notes payable 350,000 Interest Payable 7,000
6. Weekly payroll is P 180,000, paid every day Saturday for a six -day workweek. Assume December 31, 2019, falls on a
TUESDAY so the employees will not be paid until Saturday.
NO ENTRY Salaries expense 60,000 ( 180,000/6 x 2 days from Monday to Tuesday)
Salaries payable 60,000
7. On Monday, January 1, 2020, the company, which is on a six- day workweek, will pay its regular salaried employees P 320,000.
Journal entry on Dec 30 adjusting entry
Salaries expense 320,000 no entry
Cash 320,000
8. Invested P 300,000 cash in a certificate of deposit that paid 8% annual interest. The certificate was issued on APRIL 1 and
carried a 18 months term to maturity.
Note Receivable 300,000 Interest Receivable 18,000 ( 300,000x 8% x 9/12)
Cash 300,000 Interest Income 18,000
9. Rental collection was received in advance, P60, 000. Rent income account was credited. At the end of the period, P 29,000 is
earned.

CASH 60,000 UNEARNED RENT INCOME 29,000
UNEARNED RENT INCOME 60,000 RENT INCOME 29,000
10. Paid an insurance premium amounting to P 68,000. Expense method was used. At the end of the period, P 22,000 has already
expired.
INSURANCE EXPENSE 68,000 PREPAID INSURANCE 46,000
CASH 68,000 INSURANCE EXPENSE 46,000
11. An interest on notes receivable was received in advance in the amount of P 70,000. Interest income account was credited. At the
end of the period P 34,000 is unearned
CASH 70,000 INTEREST INCOME 34,000
INTEREST INCOME 70,000 UNEARNED INTEREST INCOME 34,000
12. A purchase of supplies was debited to an asset account for P 24,000. Supplies on hand when the period ended amounted to P
12,000.
SUPPLIES 24,000 SUPPLIES EXPENSE 12,000
CASH 24,000 SUPPLIES 12,000
13. Office equipment was acquired on MAY 1, 2019 that cost P 150,000. It is estimated that it will last for five years with a salvage
value of P 20,000 at the end of its life.
OFFICE EQUIPMENT 150,000 DEPRECIATION EXPENSE 17,333
CASH 150,000 ACCUMULATED DEPRECIATION 17,333
14. Paid 125,000 for an 18 months fire insurance policy to commence on June 1, 2019. The amount of premium
was debited to prepaid insurance.
PREPAID INSURANCE 125,000 INSURANCE EXPENSE 48,611
CASH 125,000 PREPAID INSURANCE 48,611
15. Borrowed P 400,000 by issuing a ten months note with 16% annual interest to BDO on June 1, 2019.
CASH 400,000 INTEREST EXPENSE 37,333
NOTES PAYABLE 400,000 INTEREST PAYABLE 37,333
16. Paid P 118,000 cash to purchase a brand new computer on March. 31, 2019. The brand new computer was expected to have a 5
year life and a salvage value of P 8,000. Depreciation is computed on a straight line basis.
OFFIC EQUIPMENT 118,000 DEPRECIATION EXPENSE 16,500
17. Received a P 74,000 cash advance for a contract to provide services in the future. The contract required a 2 year commitment,
starting March 1, 2019.
CASH 74,000 UNEARNED SERVICE INCOME 30,833
UNEARNED SERVICE INCOME 74,0000 SERVICE INCOME 30,833
18. Purchased P 15,000 of supplies for cash. At year’s end, P 8,000 supplies has already been used.
19. Invested P 137,000 cash in a certificate of deposit that paid 8% annual interest. The certificate was acquired on May 1, 2019 and
carried a 2 year term to maturity.
NOTE RECEIVABLE 137,000 INTEREST RECEIVABLE 3,307
CASH 137,000 INTEREST INCOME 3,307
20. Paid P 98,000 cash in advance on November 1, 2019 for a 1 ½ year lease on office space.
PREPAID RENT 98,000 RENT EXPENSE 10,889
CASH 98,000 PREPAID RENT 10,889
21. Payroll for a five -day workweek, to be paid on Friday , is P 125,000. The last day of the period is a Tuesday .
NO ENTRY SALARIES EXPENSE 50,000
SALARIES PAYABLE 50,000
22. The supplies account showed a beginning balance of P 19,000. Purchases during the year were P 39,000. The ending inventory
revealed supplies on hand of P 21,000.
23. Office equipment was acquired on May 1, 2019 that cost P 180,000. It is estimated that it will last for five years with a salvage
value of P 20,000 at the end of its life.
OFFICE EQUIPMENT 180,000 DEPRECIATION EXPENSE 21,333
24. Refer to number 23, what is the net book value of the office equipment at the end of 2019? 158,667
25. Refer to number 23, what is the net book value of the office equipment at the end of 2020? 126,667
26. Refer to number 23, what is the amount of depreciation expense on December 31,2020? 32,000
27. During 2019, the entity has accounts receivable balance of 450,000 and estimated uncollectible accounts of 15,000. During the
year it is estimated that 4% of the accounts receivable is uncollectible at year end.
What is the adjusting entry on December 31, 2019,
adjusting entry
UNCOLLECITBLE ACCOUNTS 3,000
ESTIMATED UNCOLLECTIBLE ACCOUNTS 3,000
28. Refer to no.27, what is the amount of uncollectible accounts to be reported in the income statement at year end? 3,000
29. Refer to no.27, what is the amount of estimated uncollectible accounts to be reported in the balance sheet at year end. 18,000
30. During 2019, the entity has accounts receivable balance of 450,000 and estimated uncollectible accounts of 15,000 and Sales /
Service Income of 700,000. During the year it is estimated that 4% of sales /service income is uncollectible at year end.
What is the adjusting entry on December 31, 2019,

UNCOLLECITBLE ACCOUNTS 28,000
ESTIMATED UNCOLLECTIBLE ACCOUNTS 28,000
31. Refer to no.30, what is the amount of uncollectible accounts to be reported in the income statement at year end? 28,000
32. Refer to no.30, what is the amount of estimated uncollectible accounts to be reported in the balance sheet at year end. 43,000

Midterm Quiz 01 - Adjusting Entries From Accrual To Provision For Uncollectible Accounts

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MIDTERM QUIZ 01 – ADJUSTING ENTRIES FROM ACCRUAL TO PROVISION FOR UNCOLLECTIBLE ACCOUNTS

Journal entry on Dec 30 adjusting entry

What is the adjusting entry on December 31, 2019,

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