Professional Documents
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ACCOUNTING
ACCOUNTING
II. Reynaldo San Mateo, an angel investor, decided to invest P1,200,000 excess
cash in a certificate of deposit on April 1, 2020. The certificate carried an 8%
annual rate of interest and a 1-year term to maturity. Interest will be withdrawn
monthly (disregard tax effects).
Required:
1. What amount of income will be recognized for the year ending Dec. 31,
2020? ANSWER: P 72,000
2. What is the effect of the adjusting entry on the accounting equation?
ANSWER: Increase in Asset and Owners Equity (Income)
3. What amount of cash will be collected for interest revenue in 2020? P
ANSWER: 72,000
4. What is the amount of interest receivable as of Dec. 31, 2020?
ANSWER: P 24,000
5. What amount of cash will be collected for interest revenue in 2021?
ANSWER: P 24,000
6. What amount of interest revenue will be recognized in 2021?
ANSWER: P 24,000
7. What is the amount of interest receivable as of Dec. 31, 2021?
ANSWER: P 0
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III. The preliminary trial balance of Tagum Traders, owned by Merry Chris Ceniza
as of Dec. 31, 20A showed in part the Accounts Receivable and its related
Estimated Uncollectible Accounts:
Debit Credit
Accounts Receivable P300,000
Estimated Uncollectible Account P 4,000
1. If at the end of the year, the Estimated Uncollectible Account is to be provided
at 3% of its outstanding receivable, what would the amount of adjustment be?
ANSWER: P 5,000
Adjusting Entry:
Adjusting Entry:
Uncollectible Accounts 6,000
Estimated Uncollectible Accounts 6,000
To record the provision for uncollectible accounts.
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IV. The following property and equipment were acquired on different dates by
Samar Manufacturing Company, a business owned and managed by Christine
Carpeso.
Required:
1. Compute the amount of depreciation expense for each asset at the end of its
fiscal year on June 30, 20B:
Property and Dates Acquisition Scrap Life in Depreciation
Equipment Acquired Cost Value Years Expense
Store Equipment Oct. 1, 20A P 150,000 P 20,000 8 P 12,187.50
Delivery Truck Jan. 1, 20B 500,000 None 5 P 50,000
Building Nov. 30,20A 950,000 50,000 10 P 52,500
2. Prepare the adjusting entries to recognize the depreciation expense for each
asset on June 30, 20B.
Adjusting entry:
Adjusting entry:
Adjusting entry:
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3. Determine the “net book value” of the above property and equipment as at fiscal
year on June 30, 20B.
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Delivery Truck P 500,000
Less: Accumulated Depreciation 50,000
NET BOOK VALUE – June 30, 20B P 450,000
Building P 950,000
Less: Accumulated Depreciation 52,500
NET BOOK VALUE – June 30, 20B P 897,500
Reconstruct the wrong entries prepared, the correct entries that should be made,
the would-be correcting entries. Utilize the space provided.
1. Cash received from a bank loan of the business in the amount of P80,000
was erroneously credited to Capital account instead of Notes Payable.
Wrong Entry Correct Entry Correcting Entry
Cash 80,000 Cash 80,000 Lopez, Capital 80,000
Lopez, Capital 80,000 Notes Payable 80,000 Notes Payable 80,000
# # #
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Wrong Entry Correct Entry Correcting Entry
Office Supplies 30,000 Office Supplies 20,000 Accounts Receivable 30,000
Accounts Receivable 30,000 Accounts Payable 20,000 Office Supplies 10,000
# # Accounts Payable 20,000
#
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VI. Prepare the adjusting entry for each of the following situations. The last day of
the accounting period is Dec. 31.
a. The payment of the P19,000 insurance premium for two years in advance
was originally recorded as Prepaid Insurance. One year of the policy has
now expired.
Adjusting Entry:
Insurance Expense 9,500
Prepaid Insurance 9,500
To record the expired (expense) portion of insurance premium.
b. All employees earn a total of P10,000 per day for a five-day week beginning
on Monday and ending on Friday. They were paid for the workweek ending
Dec. 26. They worked on Monday, Dec. 29, Tuesday, Dec. 30 and
Wednesday, Dec. 31.
Adjusting Entry:
Salaries Expense 30,000
Accrued Salaries Expense 30,000
To record unpaid salaries of the employees.
c. The Supplies account had a balance of P4,480 on Jan. 1. During the year,
P11,000 of supplies were bought. A year-end inventory showed that P6,400
worth of supplies are still on hand.
Adjusting Entry:
Office Supplies Expense 9,080
Unused Office Supplies 9,080
To record the used portion of the office supplies.
d. Equipment costing P588,000 has a useful life of five years with an P80,000
salvage value at the end of five years. Record the depreciation for the year.
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Adjusting entry:
-o0o-
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