COMPREHENSIVE EXERCISES

COMPREHENSIVE EXERCISE 1
(Source: Principles of Accounting 2nd Edition by Weygant, Chalmers, et al)
The ledger of Hocking Rental Agency on March 31 of the current year includes the following selected accounts
before adjusting entries:

Debit Credit
Prepaid Insurance 36,000
Supplies 28,000
Equipment 250,000
Accumulated Depreciation - Equipment 84,000
Notes Payable 200,000
Unearned Revenue 99,000
Rent Revenue 600,000
Interest Expense 0
Wages Expense 140,000

An analysis of the accounts shows the following:

1) The equipment depreciates P 3,000 per month.
2) One-third of the unearned rent was earned during the quarter.
3) Interest of P 5,000 is earned on the notes payable.
4) Supplies on hand total P 9,000.
5) Insurance expires at the rate of P 2,000 per month.

Instructions:
Prepare the adjusting entries as at March 31, 2022. Additional accounts are: Depreciation Expense, Insurance
Expense, Interest Payable and Supplies Expense.

SOLUTION:
Date Account Names Debit Credit
2022 (AJE NO. 1)
Mar. 31 Depreciation Expense 9,000
Accumulated Deprecuation - Equipment. 9,000
Depreciation during the first quarter.

(AJE NO. 2)
31 Unearned Rent Revenue 33,000
Rent Revenue 33,000
Rent revenue for the first quarter.

(AJE NO. 3)
31 Interest Expense 5,000
Interest Payable 5,000
Accrued interest expense for the first quarter.

(AJE NO. 4)
31 Supplies Expense 19,000
Supplies 19,000
Used supplies during the year.

(AJE NO. 5)
31 Insurance Expense 6,000
Prepaid Insurance 6,000
Expired insurance for the first quarter,
COMPREHENSIVE EXERCISE 2
(Source: Principles of Accounting 2nd Edition by Weygant, Chalmers, et al)
Greg Toohey opened a dental practice on January 1. During the first month of operations the following
transactions occurred:

1) Performed services for patients. As at January 31, P 15,600 of such services was earned but not yet
recorded.
2) Utility expenses incurred but not paid prior to January 31 totalled P 8,000.
3) Purchased dental equipment on January 1 for P 800,000, paying P 200,000 in cash and sigining a P
600,000, 3-year note payable. The equipment depreciates P 4,000 per month. Interest is P 5,000 per
month.
4) Purchased a one-year professional indemnity insurance policy on January 1 for P 240,000.
5) Purchased P 16,000 of dental supplies. On January 31, determined that P 8,000 of supplies were on
hand.

Instructions:

Prepare the adjusting entries on January 31. Account titles are Accumulated Depreciation - Dental Equipment,
Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest
Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Utilities Payable.

SOLUTION:
Date Account Names Debit Credit
2022 (AJE NO. 1)
Jan. 31 Accounts Receivable 15,600
Service Revenue 15,600
Accrued income at month-end.

(AJE NO. 2)
31 Utilities Expense 8,000
Utilities Payable 8,000
Accrued utilities at month-end.

(AJE NO. 3)
31 Depreciation Expense 4,000
Accumulated Depreciation - Dental Equipment 4,000
Depreciation for January, 2022.

(AJE NO. 4)
31 Interest Expense 5,000
Interest Payable 5,000
Accrued interest expense for the quarter.

(AJE NO. 5)
31 Insurance Expense 20,000
Prepaid Insurance 20,000
Expired insurance cost for January, 2022.

(AJE NO. 6)
31 Supplies Expense 8,000
Supplies 8,000
Supplies used for January, 2022.
COMPREHENSIVE EXERCISE 3
(Source: Principles of Accounting 2nd Edition by Weygant, Chalmers, et al)
The trial balance for Pioneer Advertising Agency is presented below.

Pioneer Advertising Agency

Trial Balance
As at October 31, 2022

Debit Credit
Cash 152,000
Advertising Supplies 25,000
Prepaid Insurance 6,000
Office Equipment 50,000
Notes Payable 50,000
Accounts Payable 25,000
Unearned Revenue 12,000
C.R. Hill, Capital 100,000
C.R. Hill, Drawings 5,000
Service Revenue 100,000
Salaries Expense 40,000
Rent Expense 9,000
287,000 287,000

Assume the following adjustment data"

1) Advertising supplies on hand as at October 31 total P 4,000.
2) Expired insurance for the month is P 2,000.
3) Depreciation for the month is P 1,000.
4) Unearned revenue earned in October totals P 12,000.
5) Services provided but not recorded as at October 31 are P 6,500.
6) Interest accrued as at October 31 is P 1,200.
7) Accrued salaries as at October 31 are P 14,000.

Instructions:
Prepare the adjusting entries for the items above.

SOLUTION:
Date Account Names Debit Credit
2022 (AJE NO. 1)
Oct. 31 Advertising Supplies Expense 21,000
Advertising Supplies 21,000
Advertising supplies used for the month.

(AJE NO. 2)
31 Insurance Expense 2,000
Prepaid Insurance 2,000
Expired insurance for the month.

(AJE NO. 3)
31 Depreciation Expense - Office Equipment 1,000
Accumulated Depreciation - Office Equipment 1,000
Depreciation for the month.

(AJE NO. 4)
31 Unearned Revenue 12,000
Service Revenue 12,000
Eraned revenue from services for the month.
 (AJE NO. 5)
31 Accounts Receivable 6,500
Service Revenue 6,500
Services provided but not recorded at month-end.

(AJE NO. 6)
31 Interest Expense 1,200
Interest Payable 1,200
Accrued interest on notes payable at month-end.

(AJE NO. 7)
31 Salaries Expense 14,000
Salaries Payable 14,000
Accrued salaries at month-end.

COMPREHENSIVE EXERCISE 4
(Source: Principles of Accounting 2nd Edition by Weygant, Chalmers, et al)
A partial adjusted trial balance of Rio Ltd. As at January 31 shows the following:

RIO LTD.
Adjusted Trial Balance
As at January 31, 2023

Debit Credit
Supplies 8,500
Prepaid insurance 24,000
Salaries Payable 8,000
Unearned Revenue 7,500
Supplies Expense 9,500
Insurance Expense 4,000
Salaries Expense 18,000
Service Revenue 20,000

Instructions:
Answer the following questions, assuming the year begins January 1.
1) If the amount in the Supplies Expense is the January adjusting entry, and P 6,500 of supplies was
purchased in January, what was the balance in Supplies on January 1?
2) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance
premium was for 1 year, what was the total premium and when the policy purchased?
3) If P 30,000 of salaries was paid in January, what was the balance in Salaries Payable as at December
31?
4) If P 16,000 was received in January for services performed in January, what was the balance in
Unearned Revenue as at December 31?

SOLUTION:
1) If the amount in the Supplies Expense is the January adjusting entry, and P 6,500 of
supplies was purchased in January, what was the balance in Supplies on January 1?

Supplies Supplies Expense

Beginning balance, January 1 11,500
Acquisition during January (given) 6,500
AJE - Supplies used (given) 9,500 9,500

Ending balance, January 31 (given) 8,500

2) If the amount in Insurance Expense is the January 31 adjusting entry, and the original
insurance premium was for 1 year, what was the total premium and when the policy
purchased?

Notes:
Policy is for one year as stated and the monthly insurance premium is P 4,000 as revealed in the
adjusting entry through trial balance which covers only one month. The instruction of the problem states
that it is assumed that the year begins January 1.

Expired insurance in January 4,000

Multiply by one year in months 12 months
Insurance premium purchased 48,000

Since the adjusted Prepaid insurance balance at January 31, 2022 was P 24,000 and the monthly
insurance premium is P 4,000. It means the remaining balance of P24,000 is for the remaining six
months of the year 2022.

The acquisition date of the insurance premium can be determined as follows:

Year 2022:
January, 2022 1 month
Remaining months in 2022 after
January 1, 2022 6 months
Year 2021:
December, 2021 1 month
November, 2021 1 month
October, 2021 1 month
September, 2021 1 month
August, 2021 1 month (Acquisition date - August 1, 2021)
12 months

3) If P 30,000 of salaries was paid in January, what was the balance in Salaries Payable as at
December 31?

Salaries Payable Salaries Expense

(b) Beginning balance, January 1 20,000 0
(c) Paid during January (given) 20,000 10,000
(a) AJE - Unpaid salaries (given) 8,000 8,000

Ending balance, Jan. 31 (given) 8,000 18,000

Salaries Payable, January 31, 2022 8,000

Add: Salaries paid in January 30,000
Total 38,000
Less: Salaries expense during 2022 18,000
Salaries Payable, January 1, 2022 20,000

Notes:
a) The AJE last year was:
Salaries Expense 20,000
Salaries Payable 20,000

b) No reversing entry was made for accrued salaries of last year.

c) Entry made upon payment of salaries in January:

Salaries expense (for this year) 10,000
Salaries Payable (from last year) 20,000
Cash 30,000
4) If P 16,000 was received in January for services performed in January, what was the
balance in Unearned Revenue as at December 31?

Unearned Revenue Service Revenue

(b) Beginning balance, January 1 11,500
(c) Collected in January (given) 16,000
(a) AJE - Earned in January (given) 20,000 20,000

Ending balance, Jan. 31 (given) 7,500 20,000

Service revenue in January 20,000

Add: Unearned Revenue, 1/31 7,500
Total 27,500
Less: Collected in January 16,000
Unearned Revenue, January 1 11,500

Notes:
(a) The method used is the liability method. The AJE at Januay 31 this year was (amount was given):
Unearned Revenue 20,000
Service Revenue 2,000

(b) The AJE at December 31 last year thaw was not reversed on January this year was:
Unearned Revenue 11,500
Service Revenue 11,500

(c) Entry made for advance collection in January was (amount was given):
Cash 16,000
Unearned Revenue 16,000
COMPREHENSIVE EXERCISE 5
(Source: Principles of Accounting 2nd Edition by Weygant, Chalmers, et al)
The trial balances before and after adjustment for Villa Ltd. At the end of its financial year are presented
below:

VILLA COMPANY
Trial Balance
As at June 30, 2023

Before Adjustment AfterAdjustment

Debit Credit Debit Credit
Cash 10,400 10,400
Accounts Receivable 8,800 9,400
Office Supplies 2,300 700
Prepaid Insurance 4,000 2,500
Office Equipment 14,000 14,000
Accumulated Depreciation - Office Equipment 3,600 4,900
Accounts Payable 5,800 5,800
Salaries Payable 0 1,100
Unearned Rent 1,500 600
Kenzo Villa, Capital 15,600 15,600
Service Revenue 34,000 34,600
Rent Revenue 11,000 11,900
Salaries Expense 17,000 18,100
Office Supplies Expense 0 1,600
Rent Expense 15,000 15,000
Insurance Expense 0 1,500
Depreciation Expense 0 1,300
71,500 71,500 74,500 74,500

Instructions:
Prepare the adjustijng entries.

SOLUTION:
Supporting analysis:

Before Adjustment AfterAdjustment ADJUSTMENTS

Debit Credit Debit Credit Debit Credit
Cash 10,400 10,400
Accounts Receivable 8,800 9,400 600 AJE NO. 1
Office Supplies 2,300 700 1,600 AJE NO. 2
Prepaid Insurance 4,000 2,500 1,500 AJE NO. 3
Office Equipment 14,000 14,000
Accum. Dep. - Office Equip. 3,600 4,900 1,300 AJE NO. 4
Accounts Payable 5,800 5,800
Salaries Payable 0 1,100 1,100 AJE NO. 5
Unearned Rent 1,500 600 900 AJE NO. 6
Kenzo Villa, Capital 15,600 15,600
Service Revenue 34,000 34,600 600 AJE NO. 1
Rent Revenue 11,000 11,900 900 AJE NO. 6
Salaries Expense 17,000 18,100 1,100 AJE NO. 5
Office Supplies Expense 0 1,600 1,600 AJE NO. 2
Rent Expense 15,000 15,000
Insurance Expense 0 1,500 1,500 AJE NO. 3
Depreciation Expense 0 1,300 1,300 AJE NO. 4
71,500 71,500 74,500 74,500 7,000 7,000
 Date Account Names Debit Credit
2023 (AJE NO. 1)
Jun 30 Accounts Receivable 600
Service Income 600
Services rendered but uncollected at June 30.

(AJE NO. 2)
30 Office Supplies Expense 1,600
Office Supplies 1,600
Office Supplies used for the fiscal year.

(AJE NO. 3)
30 Insurance Expense 1,500
Prepaid Insurance 1,500
Expired insurance for the fiscal year.

(AJE NO. 4)
30 Depreciation Expense 1,300
Accumulated Depreciation - Office Equipment 1,300
Depreciation for the fiscal year.

(AJE NO. 5)
30 Salaries Expense 1,100
Salaries Payable 1,100
Accrued salaries at June 30.

(AJE NO. 6)
30 Unearned Rent 900
Rent Revenue 900
Rent earned for the fiscal year.

COMPREHENSIVE EXERCISE 6
(Source: Principles of Accounting 2nd Edition by Weygant, Chalmers, et al)
The adjustments columns of the worksheet for Scarpe Ltd. Are shown below:

Adjustments
Debit Credit
Accounts Receivable 6,600
Prepaid Insurance 4,400
Accumulated Depreciation 9,900
Salaries Payable 5,500
Service Revenue 6,600
Salaries Expense 5,500
Insurance Expense 4,400
Depreciation Expense 9,900
26,400 26,400
Instructions:
SOLUTION:
1) Prepare the adjusting entries.
SOLUTION GUIDE:
Supporting Analysis
Adjustments
Debit Credit
Accounts Receivable 6,600 AJE NO. 1
Prepaid Insurance 4,400 AJE NO. 2
Accumulated Depreciation 9,900 AJE NO. 3
Salaries Payable 5,500 AJE NO. 4
Service Revenue 6,600 AJE NO. 1
Salaries Expense 5,500 AJE NO. 4
Insurance Expense 4,400 AJE NO. 2
Depreciation Expense 9,900 AJE NO. 3
26,400 26,400

Date Account Names Debit Credit

1 Accounts Receivable 6,600
Service Revenue 6,600
Services performed but not yet collected.

2 Insurance Expense 4,400

Prepaid Insurance 4,400
Expired insurance during the year.

3 Depreciation Expense 9,900

Accumulated Depreciation 9,900
Provision for depreciation.

4 Salaries Expense 5,500

Salaries Payable 5,500
Accrued salaries at year-end.

2) Assuming the adjusted trial balance amount of each account is normal, indicate the financial statement
column to which each balance should be extended.
SOLUTION:
Adjustments Financial Statement
Debit Credit Inc. St. SFP
Accounts Receivable 6,600 Debit
Prepaid Insurance 4,400 Debit
Accumulated Depreciation 9,900 Credit
Salaries Payable 5,500 Credit
Service Revenue 6,600 Credit
Salaries Expense 5,500 Debit
Insurance Expense 4,400 Debit
Depreciation Expense 9,900 Debit
26,400 26,400
COMPREHENSIVE EXERCISE 7
(Source: Principles of Accounting 2nd Edition by Weygant, Chalmers, et al)
Selected worksheet data for Jane Dough, Ltd. are presented below:

JANE DOUGH, LTD

Trial Balance
As at June 30, 2023

Before Adjustment AfterAdjustment

Debit Credit Debit Credit
Accounts Receivable ? 17,000
Prepaid Insurance 13,000 9,000
Supplies 3,500 ?
Accumulated Depreciation - Office Equipment 6,000 ?
Salaries Payable ? 2,500
Service Revenue 44,000 47,500
Insurance Expense ?
Depreciation Expense 5,000
Supplies Expense 2,000
Salaries Expense ? 24,500

Instructions:
1) Fill in the missing items.
2) Prepare the adjusting entries that were made.

SOLUTION:
1) Fill in the missing items.
SOLUTION:
JANE DOUGH, LTD
Trial Balance
As at June 30, 2023

Before Adjustment AfterAdjustment ADJUSTMENTS

Debit Credit Debit Credit Debit Credit
Accounts Receivable 13,500 17,000 3,500 AJE NO. 1
Prepaid Insurance 13,000 9,000 4,000 AJE NO. 2
Supplies 3,500 1,500 2,000 AJE NO. 3
Accum. Dep. - Ofc. Equip. 6,000 11,000 5,000 AJE NO. 4
Salaries Payable 0 2,500 2,500 AJE NO. 5
Service Revenue 44,000 47,500 3,500 AJE NO. 1
Insurance Expense 4,000 4,000 AJE NO. 2
Depreciation Expense 5,000 5,000 AJE NO. 4
Supplies Expense 2,000 2,000 AJE NO. 3
Salaries Expense 22,000 24,500 2,500 AJE NO. 5
17,000 17,000

Supporting Computation:
Accounts Receivable — P 13,500 (P 17,000 – P 3,500).
Supplies — P 1,500 (P 3,500 – P 2,000).
Accumulated Depreciation — P 11,000 (P 6,000 + P 5,000).
Salaries Payable — P 0 No liability recorded until adjustments are made.
Insurance Expense — P 4,000 (P 13,000 – P 9,000).
Salaries Expense — P 22,000 (P 24,500 – P 2,500).
2) Prepare the adjusting entries that were made.
SOLUTION:
Date Account Names Debit Credit
1 Accounts Receivable 3,500
Service Revenue 3,500
Uncollected revenue for services rendered.

2 Insurance Expense 4,000

Prepaid Insurance 4,000
Expired insurance premium during the accounting period.

3 Supplies Expense 2,000

Supplies 2,000
Used supplies during the accounting period.

4 Depreciation Expense 5,000

Accumulated Depreciation - Office Equipment 5,000
Provision for depreciation.

5 Salaries Expense 2,500

Salaries Payable 2,500
Accrued salaries at year-end.