ADJUSTING ENTRIES: SAMPLE PROBLEMS

1. The Supplies on Hand account balance at the beginning of the period was P6,600. Supplies totaling
12,825 were purchased during the period and debited to Supplies on Hand. A physical count shows
3,825 of Supplies on Hand at the end of the period. The proper journal entry at the end of the period is
2. Seungcheol Company paid P1,704 on June 1, 2022, for a two-year insurance policy and recorded the
entire amount as Insurance Expense. The December 31, 2022, adjusting entry is
3. Moon Junhui Company purchased equipment on November 1, 2022, by giving its supplier a 12-
month, 9 percent note with a face value of P48,000. The December 31, 2022, adjusting entry is
4. In November and December 2022, SEVENTEEN, a newly organized newspaper publisher received
P72,000 for 1,000 three-year subscriptions at P24 per year, standing with the January 2, 2023, issue of
the newspaper. How much should SEVENTEEN report its 2022 income statement for subscription
revenue?
5. Dokyeom Company received P9,600 on April 1, 2022 for one year’s rent in advance and recorded
the transaction with a credit to a nominal account. The December 31, 2022 adjusting entry is
6. Lee Chan Company paid P7,200 on June 1, 2022 for a two-year insurance policy and recorded the
entire amount as Insurance Expense. The December 31, 2022 adjusting entry is
7. Wonwoo Company purchased equipment on November 1, 2022 and gave a 3-month, 9% note with a
face value of P50,000. How much is the accrued interest in 2022?
8. Hoshi Company’s account balances at December 31, 2022 for Account Receivable and the
Allowance for Doubtful Accounts are P460,000 debit and P700 credit, respectively. From an aging of
accounts receivable, it is estimated that P18,000 of the December 31 receivables will be uncollectible.
The necessary adjusting entry is
9. Mingyu Company’s account balances at December 31, 2022 for Account Receivable and the
Allowance for Doubtful Accounts are P640,000 debit and P1,200 credit, respectively. Sales during
2004 were P1,800,000. It is estimated that 1% sales will be uncollectible. How much is the doubtful
accounts during 2022?
10. On January 1, 2022, SeungkwanCo, which uses the straight-line method, purchases for P59,000 a
machine that it expects to last for 10 years and to have a residual value of P8,000. What is the
machine’s book value at the end of 2023?
11-12. JeonghanCorp acquired a machine on April 1, 2022 for P200,000. The machine has useful life
of 10 years and estimated to have P35,000 residual value at the end of its useful life.
11. What is the amount of book value at the end of 2024?
12. What is the adjusting entry to record the depreciation on December 31, 2022?
13-15. SeokGyu Co. is in the process of determining its bad debts allowance for certain customers for
the possibility of default. Below are pertinent data relating to receivables.
Accounts Receivable P350,000
Allowance for Bad Debts beg. 8,000 Dr
Net Sales 500,000

13. Using % of Accounts Receivable method (3%), what is the amount of bad debt expense to be
recognized in income statement?
14. Using % of Accounts Receivable method (3%), what is the adjusting entry to record bad debts
expense?
15. Using % of sales method (3%), what is the amount of allowance for bad debts to be recognize in
balance sheet?
16. Minghao pays weekly salaries of P15,000 on Friday for a five-day week ending on that day. The
adjusting entry necessary at the end of the fiscal period ending on Thursday is:
17. On January 2, 2022, SEVENTEEN Corp. bought machinery under a contract that required a down
payment of P1,000,000, plus twenty-four monthly payments of P500,000 each, for total cash payments
of 13,000,000. The cash equivalent price of the machinery was P11,000,000. The machinery has an
estimated useful life of ten years and estimated salvage value of P500,000. SEVENTEEN uses straight-
line depreciation. In its 2-2- statement of financial position, what amount should SEVENTEEN report
as accumulated depreciation for this machiney?
18. A-teen Company sells magazine subscriptions for one-to-three-year subscription periods. Cash
receipts from subscribers are credited to Magazine Subscriptions Collected in Advance, and this
account had a balance of P9,600,000 at December 31, 2022, before year-end adjustment. Outstanding
subscriptions at December 31,2022, expire as follows:
During 2023 – 2,600,000
During 2024 – 3,200,000
During 2025 – 1,800,000
In its December 31, 2022, balance sheet, what amount should Winston report as the balance for
Magazine Subscriptions Collected in Advance?
19. Woozi received P12,000 from a tenant on December 1 for four-months’ rent of an office. This rent
was for December, January, February, and March. If Woozi debited Cash and Credited Unearned
Rental Income for P12,000 on December 1, what necessary adjustment would be made on December
31?
20. Vernon & Shua Company paid P12,960 for a four-year insurance policy on September 1 and
recorded the 12,960 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should
Ingle make on December 31 at the end of the accounting period?