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Year-End Financial Adjustments 2015

Del Mundo paid insurance premiums for December 2015 to May 2016 and recorded the expense and prepaid portions. An inventory count found supplies of P9,800, with the difference expensed. The company earned P6,000 in revenue for servicing police vehicles from November 2015 to December 2015. Equipment purchased in August 2015 is being depreciated over 5 years, with P21,000 in depreciation expense for 2015. Salaries of P20,000 were accrued for the last week of December 2015.

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Jessa Mae Banse Limosnero
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1K views2 pages

Year-End Financial Adjustments 2015

Del Mundo paid insurance premiums for December 2015 to May 2016 and recorded the expense and prepaid portions. An inventory count found supplies of P9,800, with the difference expensed. The company earned P6,000 in revenue for servicing police vehicles from November 2015 to December 2015. Equipment purchased in August 2015 is being depreciated over 5 years, with P21,000 in depreciation expense for 2015. Salaries of P20,000 were accrued for the last week of December 2015.

Uploaded by

Jessa Mae Banse Limosnero
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
  • Account Transactions for G. Del Mundo Car Service Center

December 31, 2015 is the yearend for the company.

The following information relating to the accounts of


the G. Del Mundo Car Service Center:
a. Del Mundo paid P24, 900 to the Prudential Guarantee and Assurance Company, Inc. on
December 1, 2015 for insurance to cover the months of December 1, 2015 to May 31, 2016. The
company used the expense method.
12/1/15
12/31/15

Insurance Expense
Cash

24, 900

Prepaid Insurance
Insurance Expense

20, 750

24, 900
20, 750

24, 900/6 = 4, 150 x 1= 4, 150 (expired = expense)


4, 150 x 5 months = 20, 750 (unexpired = asset) [24, 900 4, 150]
b. The ledger account Supplies showed a balance of P43, 500 debit balance. A count of the supplies
amounted to P9, 800.
12/31/15

Supplies expense
Supplies

33, 700
33, 700

c. Del Mundo received a P27, 000 payment from the City Government of Batangas for servicing
police vehicles for a nine month period commencing November 1, 2015. The payment is
reflected in the Unearned Revenues Account.
11/1/15

Cash

27, 000
Unearned Revenues

12/31/15

Unearned Revenues
Service revenues

27, 000
6, 000
6, 000

27, 000/9 = 3, 000 x 2= 6, 000 (earned = revenue)


3, 000 x 7 months = 21, 000 (unearned = liability) [27, 000 6, 000]
d. The Car Service Equipment account showed a P252, 000 balance at year end, representing the
acquisition cost of the equipment on August 1, 2015. The equipment is estimated to have a five
year life.
8/1/15

Car Service Equipment


Cash

252, 000
252, 000

Depreciation: 252, 000/5 = 50, 400/ year


12/31/15

Depreciation Expense
21, 000
Accumulated Depreciation
21, 000

50, 400 x 5/12 = 21, 000

e. The last day of December 2015 fell on a Thursday and the del Mundos employees are paid
P25,000 every Friday (for a 5 day workweek).
25, 000/5 = 5, 000 x 4 = 20, 000
12/31/15

f.

Salaries Expense
Salaries Payable

20, 000
20, 000

The company paid the salaries of P9, 000 on January 4, 2016.


1/4/16

Salaries Payable
Cash

9, 000
9, 000

December 31, 2015 is the yearend for the company. The following information relating to the accounts of the G. Del Mundo Car
e. The last day of December 2015 fell on a Thursday and the del Mundo’s employees are paid P25,000 every Friday (for a 5 – d

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