Classification

Classify the following items as (A) prepaid expense, (B) unearned revenue, (C)
accrued revenue, or (D) accrued expense.

__ expense incurred but not yet paid

__ paid or acquired in advance such as insurance premium

__ also known as deferred income

__ income earned but not yet collected

Problem 1 (Prepaid Expense)

Hotdogan ni Robert COMPANY purchased office supplies on September 1, 2021

amounting to P350,000 in which the company immediately paid in cash. At
December 31,2021 which coincides with the end of the accounting period, inventory
records show that the amount of remaining office supplies amount to P40,000.

Direction: Prepare the initial and adjusting entries for this transaction using two
methods namely, asset method and expense method.
Asset method Expense Method

September
1, 2021

December
31, 2021
Problem 2 (Accrued Income)
Stark Industries Medical Clinic received a 90-day, 12%, P80,000 note from a
client on November 15, 2019. Journalize the adjusting entry for the year
ended.
COA: Interest Income, Interest Receivable

Problem 3 (Depreciation)
I am Oliver Company purchased equipment on January 1, 2020 amounting
to P500,000 with residual value of P50,000 and useful life of five (5) years.
Prepare adjusting entries on asset depreciation and fill up the depreciation
table.

Date Depreciation Accumulated Carrying Value

Expense Depreciation
Jan 1, 2020 500,000

Dec 31, 2020

2021

2022

2023

2024