CLASS ACTIVITIES TODAY (Week 5)

1 OPENING PRAYER
2 CALENDAR REVIEW
3 ATTENDANCE
4 DISCUSSION: ADJUSTING JOURNAL ENTRIES
Depreciation
Exercise 3 page 318 Problem 3 page 322
Exercise 5 page 318
Exercise 10 page 175

Bad Debts
Exercise 1 page 317 Problem 1 page 322
Exercise 2 page 318 Problem 2 page 322
Exercise12 page 175

Accrued Expense
Exercise 4 page 173 Problme 4 page 323
Exercise 5 page 173

Prepaid Expense
Exercise 6 page 318 Problem 5 page 323
Exercise 8 pge 174
Exercise 9 page 174

Deferred Revenue/Unearned Revenue

Exericse 6 page 173 Problem 3 page 178
Exercise 7 page 174

Accrued Income
Exercise 14 page 175

4:15 PM
CLASS CALENDAR

Holidays/No class Wk# From To Type

FTF
1 Aug 14 Aug 19
Async
Aug 21 Ninoy Aquino FTF
2 Aug 21 Aug 26
Day Async

Aug 28 National Heroes FTF

3 Aug 28 Sep 2
Day
Async
FTF
4 Sep 4 Sep 9
Async
FTF
5 Sep 11 Sep 16
Async
FTF
6 Sep 18 Sep 23
Async
FTF
7 Sep 25 Sep 30
Async
FTF
8 Oct 2 oct 7
Async

9 Oct 9 Oct 14 Onsite

10 Oct 16 Oct 21 Async?

11 Oct 23 Oct 28

Oct 31, Nov 1 & 2

12 Oct 30 Nov 4
Holidays Async
FTF
13 Nov 6 Nov 11
Async
FTF
14 Nov 13 Nov 18
Async
FTF
15 Nov 20 Nov 25
Async
FTF
Nov 30 Bonifacio Day 16 Nov 27 Dec 2
Async
FTF
Dec 8 Feast of
17 Dec 4 Dec 9 Async
Immaculate Conception

18 Dec 11 Dec 16 Onsite

18 Dec 11 Dec 16 Onsite
 Supplemental Class Discussions (Thursday,
Activity
230-530 pm)
Class Introduction & Module 1 (Part 1)
Aug 17 Module 1 Part 2
Module 1 via Schoolbook
SQ1; Module 2 (Part 1)
Aug 24 Module 2 Part 2
Module 2 via Schoolbook
EA1: Introduction to TB (1.5 hours); Module 3
(Part 1) Aug 31 Module 3 Part 2
Module 3 via Schoolbook
SQ2; Module 4 (Part 1)
Sep 07 Module 4 Part 2
Module 4 via Schoolbook
Modules 5 & 6 (Part 1)
Sep 14 Modules 5 & 6 Part 1A
Modules 5 & 6 via Schoolbook
EA2 (Payroll & Notes) ; Modules
(Part 2) Sep 21 Modules 5 & 6 Part 2A
Modules 5 & 6 via Schoolbook
SQ3; Modules 5 & 6 (Part 3);
Sep 28 Modules 5 & 6 Part 3A
Modules 5 & 6 via Schoolbook
EA03 (AJE, FS, Year-End Procedures)

Review for Midtern Exams (via MS Teams)

SA1: Midterm Exams (CPALE Simulation: 100

items MC, 3 hours)

Students' Week

Self-Care Week

School Holiday
Module 6 via SB
SQ4; Module 6 Part 1
Nov 9 Module 7 Part 2
Module 7 via SB
SQ5; Module 7 Part 1
Nov 16 Module 8 Part 2
Module 7 via SB
SQ6; Module 7 Part 3
Nov 23 Module 9 Part 1
Module 8 via SB
EA04 (Merchandising); Module 9 Part 2
Nov 30 Holiday; May be rescheduled
Module 8 via SB
SQ9; Module 9 Part I
Module 9 via SB Dec 7 Module 10 Part 2
EA05 (Cash Controls & Manufacturing); Online

SA2: Final Exams

SA2: Final Exams
Discussions (Thursday,
Modules
530 pm)

odule 1 Part 2 1. Overview of Accounting Principles, and Its Professional

Environment

odule 2 Part 2 2. Accounting for Transaction of a Service Oriented Business

odule 3 Part 2 3. Payroll

odule 4 Part 2 4. Promissory Note

les 5 & 6 Part 1A

5 & 6. Adjusting Journal Entries, FS and Year-end Procedures

les 5 & 6 Part 2A

les 5 & 6 Part 3A

7. Merchandising: Sales, Purchases,. Freight Cost; Periodic and

Perpetual; Gross Method and Net Method
dule 7 Part 2

8. Documents and Special Journals, Voucher System and Financial

odule 8 Part 2
Statements for Merchandising Business (VAT)

odule 9 Part 1

9. Cash Controls: Bank Recon and PCF

May be rescheduled

dule 10 Part 2
10. Manufacturing (JE for tranx peculiar to Manufacturing); SCG Ma
Exercise 4 page 173

Mon Tues Wed Thurs Fri Sat

work work work work work pay
salary 450 450 450 450 450.00

year end
May 31
29-May 30-May 31-May
450 450 450
accrued as fo May 31
will be paid on June 3

AJE
May 31 Salaries Expense 1,350.00
Salaries Payable 1,350.00

Exercise 6 page 318

Monthly rent 15,000.00

advanced 6.00 months
Total advanced payment 90,000.00

Aug 1 Prepaid Rent 90,000.00

Cash 90,000.00

Dec 31 Rent Expense 75,000.00

Prepaid Rent 75,000.00
5 months x 15,000

Prepaid Rent FS Presentation:

Aug 1 90,000.00 Dec 31 75,000.00 Statement of Income
15,000.00 Revenues
Less: Expenses
Rent Expense

Rent Expense Statement of Financial Position

Dec 31 75,000.00 ASSETS
75,000.00 Current Assets
 Cash
Accounts Receivable, net
Prepaid Rent

Exericse 6 page 173

subsription price per issue 100
# of issue/s released per month 1

1-Mar 45,139.00
# of subcribers 50 100.00
x # of issues subscribed 12 12.00
x payment per issue 100 100.00
total advanced payment received 60,000.00 120,000.00

Total
Months earned as of December 31 10 5.00
Amount earned 50,000.00 50,000.00 100,000.00

Mar 1 Cash 60,000.00

Advances from Subcribers 60,000.00

Aug 1 Cash 120,000.00

Advances from Subcribers 120,000.00

Dec 31 Advances from Subscribers 100,000.00

Subscription Revenue 100,000.00

Exercise 14 page 175

2022
Dec 31 Interest Receivable 500.00
Interest Income 500.00
(60,000 x 20% x 15/360)

Office Supplies 39,000.00 Asset Method

On hand (unused) 12,000.00
Used or Office Supplies Expense 27,000.00

Office Supplies Expense 27,000.00

Office Supplies 27,000.00

Option 1:
Bad Debts Expense 7,000.00
 Accounts Receivable 7,000.00

Furniture and Fixtures in the TB 65,000.00

investment on January 1, 2022 purchase on July 1, 2022

Cost 35,000 Cost
Salvage Value 5,000 Salvage Value
Depreciable Cost 30,000 Depreciable Cost
EUL 5 years EUL
Annual Depreciation 6000 Annual Depreciation
# of mos used 12 mos # of mos used
Depreciation Expense 6000 Depreciation Expense

Depreciation Expense - Furniture and Fixtures 9,000.00

Accumulated Depreciation - Furniture and Fixtures 9,000.00

Cost 280,000
Salvage Value 40,000
Depreciable Cost 240,000
EUL 5
Annual Depreciation 48000
# of mos used 10
Depreciation Expense 40000

Depreciation Expense - Office Equipment 40,000.00

Accumulated Depreciation - Office Equipment 40,000.00

Salaries Expense 9,000.00

SSS Premiums Payable 500.00
Philhealth Premiums Payable 300.00
HDMF Premiums Payable 200.00
Cash 8,000.00

SSS Premium Expense 1,000.00

Philhealth Premiums Expense 300.00
HDMF Premiums Expense 200.00
 SSS Premiums Payable 1,000.00
Philhealth Premiums Payable 300.00
HDMF Premiums Payable 200.00

Unearned Legal Fees Revenue 17,000.00 Liability Method

Unearned as of December 31, 2022 7,000.00
Earned 10,000.00

Unearned Legal Fees Revenue 10,000.00

Legal Fees Revenue 10,000.00

Percentage Tax 5,000.00

Percentage Tax Payable 5,000.00
Presentation:
tement of Income

s: Expenses
Rent Expense 75,000.00

tement of Financial Position

rrent Assets
counts Receivable, net
epaid Rent 15,000.00

set Method

Option 2:
Bad Debts Expense 7,000
 Allowance for Bad Debts 7,000

Allowance for Bad Debts 7,000

Accounts Receivable 7,000

chase on July 1, 2022

30,000
vage Value 0
preciable Cost 30,000
5 years
nual Depreciation 6000
f mos used 6 mos
preciation Expense 3000
bility Method
ADJUSTING JOURNAL ENTRIES
What? journal entries
Why? update / correct the balances of the accounts
When? at the end of the accounting period
Where? general journal
How?
Adjustment Item Pro-forma Adjusting Journal Entries
1 Depreciation Depreciation Expense
Accumulated Depreciation

2 Bad Debts Provision for Problable Losses

Allowance for Probable Losses

3 Accrued Expenses Expense

Payable

Accrued Interest Expense Interest Expense

Interest Payable

4 Accrued Revenues Receivable

Revenue or Income

Accrued Interest Income Interest Receivable

Interest Income

5 Prepaid Expenses
a. Asset Method Expense
Asset or Prepaid Expense

b. Expense Method Asset or Prepaid Expense

Expense

6 Unearned Revenues
a. Liability Method Unearned Income
Income or Revenue

b. Revenue Method Income or Revenue

Unearned Income

7 To set up Merchandise Merchandise Inventory, End

Inventory, End
 To set up Merchandise
Inventory, End Income and Expense Summary
periodic inventory system
perpetual inventory system

TO CONTINUE WITH CRUZ REPAIR SHOP:

ADDITIONAL INFORMATION FOR ADJUSTMENT (CRUZ REPAIR SHOP):
1
The equipment acquired on June 4, 2022 has an estimated useful life of 5 years with an estim
company's policy to depreciate the asset for full month on the month of acquisition and no d
disposal.

2 It is estimated that P300 of accounts receivable will prove to be uncollectible.

3 Unpaid PLDT and Maynilad bills for the month of June are P270 and P130, respectively.

4 Supplies used up, P700.

Cost 25,000
- Salvage Value (Residual Value) 1,000
= Depreciable Cost 24,000
/ Estimated Useful Life 5
Annual Depreciation 4800
/ # of mos. In a year 12
Monthly Depreciation 400

1 Analysis of Transactions to be Accounted for

2 Journalizing
3 Posting
4 Trial Balance
5 Worksheet
6 Financial Statements
7 Adjusting Journal Entries
sting Journal Entries Amount of Adjustment
xxx
Depending on the Method and number of months
xxx the asset was used (Straight Line Method)

xxx
Depending on the Method (Aging of Receivables)
xxx

xxx
Amount incurred but not yet paid
xxx

xxx I = Principal x rate x time; (time from last

interest payment or date of issuance of debt to
year end)
xxxx

xxx
Amount earned but not yet collected
xxx

xxx I = P x r x t; (time from last interest collection or

date of issuance of debt to year end)
xxxx

xxx
Expired/Used up portion
xxx

xxx
Unexpired/Unused portion
xxx

xxx
Earned portion
xxx

xxx
Unearned portion
xxx

xxx
Amount of merchandise on hand at year end
 Amount of merchandise on hand at year end
xxx

eful life of 5 years with an estimated residual value of P1,000. It is the

month of acquisition and no depreciation is recognized on the month of

e uncollectible.

0 and P130, respectively.

Unpaid bills:
PLDT 270
Maynilad 130
400
Accrued Expense

Supplemental Class Saturday 230-530 pm Journal Entries

ACCRUED EXPENSES
***Accrued expenses are expenses already incurred but not yet paid.

Illustrative Example:
Received a bill from Meralco on January 3, 2023 for the December 2022 energy
consumption, P3,000.

YEAR 2022
BEFORE ADJUSTMENT
Utilities Payable - 3,000.00
Utilities Expense 52,000.00 3,000.00

Adjusting Journal Entry: Dr

dr expense Utilities Expense 3,000.00
cr liability Utilities Payable

ANOTHER EXAMPLE OF ACCRUED EXPENSE - Interest Expense on Notes Payable:

On November 20, 2022 the company issued a 120-day, 12%, P500,000

promissory note in exchange for equipment purchased.

Date issued 20-Nov-22

Principal 500,000
Term 120 days
Interest Rate 12%

Accrued # of days as of Dec 31, 2022 and Due Date:

Nov 30
20
10
Dec 31
41 recognize interest on this note for 41 days as of December
Jan 31
Feb 28
100
Mar 20 Due date: date when the principal amount and the interes
120

Interest Expense as of December 31, 2022:

 Principal 500,000
Interest rate 12%
# of days accrued 41
# of days in a year 360
Accrued Interest 6,833.33

Adjusting Journal Entry: Dr

Interest Expense 6,833.33
Interest Payable

Effects of failure to record accrued expense:

Revenue No Effect
Expenses Under
Net Income Over
Assets No Effect A=L+E
Liabilities Under No Effect = Under + Ove
Equity Over No Effect = No Effect
 A=L+E
AFTER No Effect = Under + Over
3,000.00 No Effect = No Effect
55,000.00

Cr

3,000.00

1 days as of December 31, 2022 AJE

mount and the interest on the note is paid

 Cr

6,833.33

No Effect = Under + Over

No Effect = No Effect
ACCRUED REVENUES
***Accrued revenues are revenues already earned but not yet received.

The company sublet its office for a P2,500 monthly rental to be paid on the 5th
day of the following month.

YEAR 2022
BEFORE ADJUSTMENT
Rent Receivable - 2,500.00
Rent Income 27,500.00 2,500.00

Adjusting Journal Entry: Dr

Dr asset Rent Receivable 2,500.00
Cr revenue Rent Income

ANOTHER EXAMPLE OF ACCRUED REVENUE - Interest Income on Promissory Note

On October 7, 2022 the company received a 10%, 90-day, P100,000 promissory
note from a customer in exchange for services rendered.

Oct 7 Notes Receivable 100,000

Service Income

Principal 100,000
Interest Rate 10%
Term 90 days

Accrued # of days as of Dec 31, 2022 and Due Date:

Oct 31
7
24
Nov 30
Dec 31
85 accrued number of days as of December 31, 2022
Jan 5 maturity date
90 term of note

Accrued Interest on Notes Receivable as of December 31:

Principal 100,000
Interest Rate 10%
number of days accrued 85
 number of days in year 360
Accrued interest 2,361.11

Adjusting Journal Entry: Dr

Interest Receivable 2,361.11
Interest Income

Effects of failure to record accrued revenue:

Revenue Under Revenues
Expenses No Effect Less: Expenses
Net Income Under Net Income
Assets Under
Liabilities No Effect
Equity Under
 AFTER
2,500.00
30,000.00

Cr

2,500.00

100,000

mber 31, 2022

 Cr

2,361.11

correct incorrect
100,000 90,000
ess: Expenses 60,000 60,000
Net Income 40,000 30,000
Prepaid Expenses

The company paid a 1-year insurance of P12,000 on May 1, 2022.

YEAR 2022
BEFORE
Prepaid Insurance 12,000.00
-

asset method
Insurance Expense

Adjusting Journal Entry:

Insurance Expense
Prepaid Insurance

What if?
YEAR 2022
BEFORE
Prepaid Insurance -
expense method

Insurance Expense 12,000.00

Adjusting Journal Entry:

Prepaid Insurance
Insurance Expense

Asset Method
Journal entry to record the payment:
May 1 Prepaid Insurance 12,000.00
Cash

12,000 = 12 months
1-May-22
May 1, 2022 to December 31
12,000 x 8/12 Used/Expired = Expens
8 months
8,000

Journal entry to record the adjustment:

Dec 31 Insurance Expense 8,000.00
 Prepaid Insurance

Prepaid Insurance
May-01 12,000 Dec 31 8,000
4,000

Insurance Expense
Dec-31 8,000
8,000
 EFFECT IF NO ADJUSTMENT WAS MADE
YEAR 2022 Revenues No Effect
ADJUSTMENT AFTER Expenses Understated
(8,000.00) 4,000.00 Net Income Overstated
8,000.00 8,000.00 Assets Overstated
Liabilities No Effect
Dr Cr Equity Overstated
8,000.00 expense Dr
8,000.00 asset Dr

EFFECT IF NO ADJUSTMENT WAS MADE

YEAR 2022 Revenues No Effect
ADJUSTMENT AFTER Expenses Overstated
4,000.00 4,000.00 Net Income Understated
(4,000.00) 8,000.00 Assets Understated
Liabilities No Effect
Dr Cr Equity Understated
4,000.00 asset Dr
4,000.00 expense Dr

Expense Method

May 1 Insurance Expense 12,000.00

12,000.00 Cash

12,000 = 12 months insurance; 1,000/month

1-May-23
May 1, 2022 to December 31, 2022 1/1/23 to 5/1/23
Used/Expired = Expense Unexpired = Asset Prepaid Insurance
8 months 4 months 12,000 x 4 /12
8,000 4,000.00

Dec-31

Dec 31 Prepaid Insurance 4,000.00

8,000.00 Insuarance Expense

Prepaid Insurance
Dec 31 4,000
4,000

Insurance Expense
May 1 12,000 Dec 31 4,000
8,000
TMENT WAS MADE
No Effect
Understated
Overstated
Overstated
No Effect
Overstated

TMENT WAS MADE

No Effect
Overstated
Understated
Understated
No Effect
Understated

12,000.00
4,000.00
UNEARNED REVENUES
***Unearned revenues are revenues already received but not yet earned.

The company received advance rental payment for 6 months of P36,000 on

September 1, 2022.

YEAR 2022
BEFORE ADJUSTMENT
Unearned Rent Income 36,000.00 (24,000.00)

liability method
Rent Income - 24,000.00

Adjusting Journal Entry:

Unearned Rent Income
Rent Income

What if?
YEAR 2022
BEFORE ADJUSTMENT
Unearned Rent Income 0 12,000
revenue method

Rent Income 36,000 -12000

Adjusting Journal Entry:

Rent Income
Unearned Rent Income

Liability Method
Journal entry to record the collection:
Sep 1 Cash 36,000
Unearned Rent Income 36,000

6 months rent = 36,

September 1
Earned Portion = Revenu
4 months
Rent Income = 24,000

Journal entry to record the adjustment:

Dec 31 Unearned Rent Income 24,000
Rent Income 24,000
 Unearned Rent Income
Dec 31 24,000 Sep 1 36,000
12,000

Rent Income
Dec 31 24,000
24,000
 EFFECT IF NO ADJUSTMENT WAS MADE
R 2022 Revenues Understated
ADJUSTMENT AFTER Expenses No Effect
(24,000.00) 12,000.00 Net Income Understated
24,000.00 24,000.00 Assets No Effect
Liabilities Overstated
Dr Cr Equity Understated
24,000.00 liability Cr
24,000.00 revenue Cr

EFFECT IF NO ADJUSTMENT WAS MADE

R 2022 Revenues Overstated
ADJUSTMENT AFTER Expenses No Effect
12,000 12,000 Net Income Overstated
-12000 24,000 Assets No Effect
Liabilities Understated
Dr Cr Equity Overstated
12,000 revenue Cr
12,000 liabiliity Cr

Revenue Method

Sep 1 Cash 36,000

Rent Income

6 months rent = 36,000 = 6,000/month.

February 28 1-Mar
Earned Portion = Revenue Unearned Portion Unearned Unearned Earned Portion Revenue
4 months 2 months 2 Unearned months
Rent Income = 24,000 URI = 12,000 URI = Unearned Rent Income

Dec-31

Dec 31 Rent Income 12,000

Unearned Rent Income
 Unearned Rent Income
Dec 31 12,000
12,000

Rent Income
Dec 31 12,000 Sep 1 36,000
24,000
TMENT WAS MADE
Understated
No Effect
Understated
No Effect
Overstated
Understated

TMENT WAS MADE

Overstated
No Effect
Overstated
No Effect
Understated
Overstated

36,000

n Revenue

12,000
MERCHANDISING BUSINESS
PERIODIC INVENTORY SYSTEM
PART OF YOUR ADJUSTING JOURNAL ENTRY AT THE END OF THE ACCOUNTING PERIOD
SETTING UP OF MERCHANDISE INVENTORY AT THE END

Merchandise Inventory, December 31 200,000

Income and Expense Summary 200,000
CRUZ REPAIR SHOP
WORKSHEET
FOR THE MONTH ENDED JUNE 30, 2022
Amounts in Philippine Peso

from Trial Balance AJE from Gen Journal

Unadjusted Trial Balance Adjustments

Dr Cr Dr Cr
Cash 187,700.00
Accounts Receivable 4,500.00
Allowance for Bad Debts 300.00
Supplies 1,500.00 700.00
Equipment 25,000.00
Accumulated Depreciation 400.00
Accounts Payable 12,500.00
Utilities Payable 400.00
Cruz, Capital 200,000.00
Cruz, Drawing 3,000.00
Income and Expense Summary
Repairs Revenue 17,000.00
Rent Expense 2,500.00
Salaries Expense 2,500.00
Supplies Expense 700.00
Utilities Expense 2,800.00 400.00
Bad Debts Expense 300.00
Depreciation Expense 400.00
Total 229,500.00 229,500.00 1,800.00 1,800.00
Net Income/Net Surplus
Total
 Contra-Assets
Cr - Dr = Cr Withdrawal Liabilities
Dr - Cr = Dr
Cr + Cr = Cr Capital
Dr + Dr = Dr Drawing Liabilities
UTB + Adjustments Expenses Revenues Assets Contra-Assets

Adjusted Trial Balance Statement of Income Statement of Financial Position

Dr Cr Dr Cr Dr Cr
187,700.00 187,700.00
4,500.00 4,500.00
300.00 300.00
800.00 800.00
25,000.00 25,000.00
400.00 400.00
12,500.00 12,500.00
400.00 400.00
200,000.00 200,000.00
3,000.00 3,000.00
-
17,000.00 17,000.00
2,500.00 2,500.00
2,500.00 2,500.00
700.00 700.00
3,200.00 3,200.00
300.00 300.00
400.00 400.00
230,600.00 230,600.00 9,600.00 17,000.00 221,000.00 213,600.00
7,400.00 7,400.00
17,000.00 17,000.00 221,000.00 221,000.00

Cr > Dr ----> Net Income Dr > Cr ------> Net Income

Cr < Dr ------> Net Loss Dr < Cr --------> Net Loss
Cr = Dr -------> Break-even Dr = Cr --------> Break-even
For every debit, there must be a corresponding credit
and their amounts must always be equal.

7,400 represents Net Income, and Net Income

increases Capital; Capital increases under Credit