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Adjusting Entries 3

The document provides information about adjusting journal entries for an accounting period, including accounts receivable balances, notes receivable, supplies inventory, property and equipment details, notes payable, unpaid bills, unearned revenue, prepaid expenses, and accrued expenses.

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Victoria S. Veneracion
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30 views

Adjusting Entries 3

The document provides information about adjusting journal entries for an accounting period, including accounts receivable balances, notes receivable, supplies inventory, property and equipment details, notes payable, unpaid bills, unearned revenue, prepaid expenses, and accrued expenses.

Uploaded by

Victoria S. Veneracion
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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New Era University

College of Accountancy
FUNDAMENTAL OF ACCOUNTING
ADJUSTING ENTRIES – EXERCISE 3

Prepare the adjusting journal entries on December 31, 2019 based on the following independent assumptions

1. The company’s records show the following balances as at December 31, 2019:
Dr. Cr.
Accounts receivable P 300,000
Allowance for doubtful accounts 10,000
Revenue 1,000,000

The Company estimated its doubtful accounts at 5% of Accounts receivable.

2. There were three notes in the company’s possession, details follow:


a.) A 60-day 6% note for P60,000 dated December 31, 2019.
b.) A 90-day 9% note for P90,000 dated December 1, 2019.
c.) A 150-day note for P150,000 discounted at 15% on November 1, 2019.

3. Physical count of supplies at the end of the year revealed the balance of P20,000. The Unused office supplies
account had a beginning balance of P15,000. During the year, the company purchased office supplies amounted
to P30,000.

4. Information on property and equipment were as follows:


Cost Estimated Life
Land P5,000,000 50 years
Building 3,000,000 20 years
Furniture and equipment 500,000 5 years

An equipment costing P50,000 was only purchased on October 1, 2019.

5. The following are the notes issued by the company:


a.) A 90-day 6% note for P40,000 dated December 31, 2019.
b.) A 120-day 12% note for P50,000 dated November 16, 2019.
c.) A 180-day note for P100,000 discounted at 12% on October 17, 2019.

6. Unpaid bills as of the end of the year were as follows:


PLDT P 10,000
Meralco 20,000

7. Unearned rental account amounting to P30,000 represents a 3-month advance rental paid by the sub-lessee on
December 1, 2019.

8. Insurance expense account represents the following annual premiums:


a.) An insurance on building amounting to P36,000 effective March 31, 2019.
b.) An insurance on vehicle amounting to P24,000 effective August 1, 2019.

9. Royalty income account amounting to P120,000 is for a 6-month advance payment made by a franchisee
commencing September 1, 2019.

10. Prepaid rent account amounting to P240,000 represents a 12-month advance rental paid on February 1, 2019.
The lease took effect on March 1, 2019.

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