Chapter 8

Adjusting Entries

Name: Grace D. Beloy Date: 02/19/23

Section: Fin222 Professor: Mr. Lysander Dela Cruz

Problem 1

1. False
2. False
3. True
4. True
5. False
6. False
7. True
8. True
9. False
10. True

Problem 2

1.

Advertising Expense 200,000

Advertising Payable 200,000

2.

Interest Receivable (180,000 x 10% x 2/12) 3,000

Interest Income 3,000

3.

Depreciation Expense [(420,000÷8)x 1/12] 4,373

Accumulated Depreciation 4,373

 4.

Bad Debts Expense 45,000

Allowance for Bad Debts 45,000

5.
A.
Liability Method
May 1, 20x1 Cash 480,000

Unearned Rent 480,000

To record receipt of 1-year rent in advance

Income Method
May 1, 20x1 Cash 480,000

Rent Income 480,000

To record receipt of 1-year rent in advance

B.
Liability Method
Dec 31, 20x1 Unearned Rent 320,000

Rent Income 320,000

To recognize the earned portion of the

1-year rent in advance

Income Method
Dec 31, 20x1 Rent Income 160,000

Unearned Rent 160,000

To recognize the unearned portion of the

1-year rent in advance

(480,000 x 8/12) = 320,000

(480,000 x 4/12) = 160,000
 6.
A.
Asset Method
Aug 1, 20x1 Prepaid Insurance 360,000

Cash 360,000

To record the payment of 1-year insurance

Expense Method
Aug 1, 20x1 Insurance Expense 360,000

Cash 360,000

To record the payment of 1-year insurance

B.
Asset Method
Dec 31, 20x1 Insurance Expense 150,000

Prepaid Insurance 150,000

To recognize the expired portion of 1-year

insurance

Expense Method
Dec 31, 20x1 Prepaid Insurance 210,000

Insurance Expense 210,000

To recognize the unexpired portion of 1-year

insurance

(360,000 x 5/12) =150,000

(360,000 x 7/12) =210,000