Quiz #3

Solutions to Problem Solving

Set C
1 Merchandise Inventory ₱ 45,000
Based on physical count of merchandise

Adjusting entry:
Merchandise Inventory ₱ 45,000
Income summary ₱ 45,000
adjust for ending inventory

2 Principal ₱ 30,000
Rate x 0.15
Time (30/360) x 0.08
Interest income ₱ 375

3 October 30 ₱ 14,200
October 31 15,000
Accrued Wages Expense ₱ 29,200

4 Supplies, beg ₱ 2,600

Supplies purchased 8,700
Supplies, end (1,500)
Supplies expense ₱ 9,800

5 Prepaid Advertising Expense ₱ 70,700

Rate of unexpired portion x 60% 40% used
Prepaid Advertising Expense, end ₱ 42,420

6 Unearned Rent Income ₱ 360,000

Ratio of the months earned* x 0.83 Aug to Dec
Rental Income ₱ 300,000
* or months used. x 5/6

7 Client 1 Client 2
Collection ₱ 240,000 ₱ 240,000
Months unearned x 7 x 11
Total months ÷ 12 ÷ 12
Unearned Services Revenue ₱ 140,000 ₱ 220,000
Total Unearned Services Revenue ₱ 360,000
 8 Cost ₱ 30,000
Salvage value - 3,000
Depreciable cost ₱ 27,000
Estimated life in years ÷ 5
Depreciation per year ₱ 5,400
Months used x 1/12
Depreciation Expense - October ₱ 450

9 Accumulated Depreciation - 2022 ₱ 1,800 Sept to Dec

Depreciation Expense - 2023 5,400 Annual
Accumulated Depreciation - 2023 ₱ 7,200

10 Delivery Equipment ₱ 1,500,000

Accumulated Depreciation - 247,500
Net carrying amount ₱ 1,252,500

Depreciable cost ₱ 1,350,000 90% of cost

Estimated life in years ÷ 5
Depreciation per year ₱ 270,000
Months used x 11/12
Accumulated Depreciation ₱ 247,500

11
0 to 60 days ₱ 875
61 to 120 days 1,500
Over 120 days 4,200
Allowance for doubtful accounts, end ₱ 6,575
Allowance for doubtful accounts, bal - 3,500
Doubtful accounts expense ₱ 3,075

12 Accounts Receivable ₱ 757,600

Allowance for doubtful accounts, end - 22,728 3% of AR
Net realizable value ₱ 734,872