Exercise 1

Rent Security Deposit 25,000

Last Month’s Rent 10,000
Nonrefundable payment
(60,000 – 60,000/60 mos.) 59,000
Portion deferred C. P94,000

Exercise 2
Funded Past Service Cost 59,600
Amortized Service Cost 46,700
Deferred Pension Cost A. P12,900

Exercise 3
Face Amount (P1,000 x 1,000 units) 1,000,000
Bond Price 939,000
Bond Discount 61,000
Amortized Bond Discount
(P93,900 – P90,000) (3,900)
Deferred Amount A. P57,100

Exercise 4
Prepaid Rent for 6 mos.
(P36,000 x 6/12) 18,000
Unexpired Lease Bonus 24,000
(P24,000/36 mos x 6 mos) (4,000) 20,000
Prepaid Rent D. 38,000

Exercise 5
a. Prepaid Advertising 12,000
 Advertising Expense 12,000

b. Office Supplies 250

Office Supplies Expense 250

c. Insurance Expense 350

Prepaid Insurance 350

d. Factory Supplies 1,100

Factory Supplies Expense 1,100

e. Unexpired Subscriptions 1,400

Subscription Expense 1,400
(P1,800 x 28/36)

f. Insurance Expense 400

Prepaid Insurance 400
(P3,600 x 4/36)

g. Prepaid Closing Costs 11,400

Rent Expense 11,400
(P12,000 x 9.5/10)

h. Unexpired Dues and Subscription 800

Dues and Subscription Expense 800
(P1,200 x 8/12)

i. Dues and Subscription Expense 360

Prepaid Dues and Subscription 360

j. Prepaid Vacation Expense 3,000

Vacation Expense 3,000

Problem 1
Policy No. Total Premium Prior 20x3 20x3 Prepaid (12/31/20x3
0010 1,872 260 624 988
0020 2,736 0 836 1,900
0030 720 300 360 60
0040 768 288 192 288
0050 360 0 50 310
0060 1,200 350 600 250
0070 240 0 40 200
0080 480 220 240 20
0090 195 0 146.25 48.75
0100 2,160 360 540 1,260
0110 120 0 40 80
0120 120 0 40 80
P10,971 P1,778 P3,708.25 P5,484.75

Insurance Expense P3,708.25

Retained Earnings 1,778
Prepaid Insurance P5,486.25