Seatwork 1 - Provide solutions on your answer sheet

1.An entity’s unadjusted trial balance does not equal. The following information was determined:
• The debit posting for a sale on account was omitted. 5,000
• The balance of Prepaid assets was listed as a credit instead of debit
34,000
• The balance of Office expense was listed as Rent expense 16,000
• Accounts payable was listed as a debit instead of credit 4,000

How much is the difference between the total debits and total credits in the trial balance?
a. 65,000 b. 81,000 c. 30,000 d. 34,000

1. The debit total of a trial balance exceeds the credit total by ₱600. In investigating the cause of
the difference, the following errors were determined:
a) A debit to accounts receivable of ₱2,100 was not posted;
b) A ₱10,500 credit to be made to the Purchases account was credited to Accounts payable
instead;
c) A ₱26,000 credit to be made to the Sales account was credited to the Accounts receivable
account instead;
d) The prepaid rent account balance of ₱15,800 was included in the trial balance as ₱18,500.

How much is the correct balance of the trial balance?

a. 36,500 b. 15,500 c. 20,900 d. 13,400

2. The total debits in the statement of financial position columns of a worksheet amounted to
₱1,440,800 while the total credits in the income statement columns is ₱1,234,000. The total
credits in the adjusted trial balance is ₱2,376,000.

How much is the profit/(loss) for the period?

a. 298,800 b. (298,800) c. 206,800 d. (206,800)

Use the following information for the next four questions:

An entity receives ₱360,000 advance rent covering 3 years starting January 1, 20x1.

3. If the entity uses the liability method of initial recording, the 20x1 year-end adjusting journal
entry includes
a. a debit to rent income for ₱120,000
b. a credit to unearned rent for ₱240,000
c. a debit to unearned rent for ₱120,000
d. a credit to rent income for ₱240,000

4. If the entity uses the income method of initial recording, the 20x1 year-end adjusting journal
entry includes
a. a debit to rent income for ₱240,000
 b. a credit to unearned rent for ₱120,000
c. a debit to unearned rent for ₱240,000
d. a credit to rent income for ₱120,000

5. If the entity uses the income method of initial recording, how much is the rent income for the
year 20x1?
a. 240,000 b. 180,000 c. 120,000 d. 80,000

6. If the entity uses the liability method of initial recording, how much is the unearned rent as of
December 31, 20x1?
a. 240,000 b. 180,000 c. 120,000 d. 80,000

Use the following information for the next four questions:

An entity prepays a ₱240,000 one-year insurance on August 1, 20x1.

7. If the entity uses the asset method of initial recording, the 20x1 year-end adjusting journal
entry includes
a. a credit to prepaid insurance for ₱140,000
b. a credit to insurance expense for ₱140,000
c. a credit to prepaid insurance for ₱100,000
d. a debit to prepaid insurance for ₱140,000

8. If the entity uses the expense method of initial recording, the 20x1 year-end adjusting journal
entry includes
a. a debit to prepaid insurance for ₱140,000
b. a credit to insurance expense for ₱140,000
c. a debit to prepaid insurance for ₱100,000
d. a debit to insurance expense for ₱140,000