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Adjusting Entries Practice Problems

The document outlines various adjusting entries for financial accounting, detailing transactions related to prepaid insurance, notes payable, delivery equipment, unearned service income, supplies, and certificate deposits. Each entry includes the date, particulars, debit and credit amounts, and calculations for expired portions, accrued interest, and depreciation. The adjustments reflect the recognition of expenses and income over specified periods, ensuring accurate financial reporting.

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7 views3 pages

Adjusting Entries Practice Problems

The document outlines various adjusting entries for financial accounting, detailing transactions related to prepaid insurance, notes payable, delivery equipment, unearned service income, supplies, and certificate deposits. Each entry includes the date, particulars, debit and credit amounts, and calculations for expired portions, accrued interest, and depreciation. The adjustments reflect the recognition of expenses and income over specified periods, ensuring accurate financial reporting.

Uploaded by

a.carias.135607.tc
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

Abubakar Carias

Bachelor of Science in Accountancy


ACC111-1378
Financial Accounting and Reporting

PRACTICE PROBLEM-ADJUSTING ENTRIES

DATE PARTICULARS DEBIT CREDIT


2014
Sep. 1 Prepaid Insurance P24,000.00
Cash P24,000.00
Prepaid insurance payment.

Dec. 31 Insurance Expense 8,000.00


Prepaid Insurance 8,000.00
To recognize expired portion.

SOLUTION: SEPTEMBER-DECEMBER= 4 MONTHS expired portion.


P24,000x1/3 of 12 months to compute the expired portion.
P24,000x1/3=8,000 amount of insurance that has been used.

DATE PARTICULARS DEBIT CREDIT


2014
Oct. 1 Cash P100,000.00
Notes Payable P100,000
Borrowed funds on note.

Dec. 31 Interest Expense 1,750.00


Accrued Interest Payable 1,750.00
Accrual interest of loan on note.
SOLUTION: OCTOBER-DECEMBER=3 MONTHS OR QUARTER
100,000x7% annual interest= 7,000 pesos for 12 months
7000x1/4= 1,750.00 per quarter interest payment

DATE PARTICULARS DEBIT CREDIT


2014
Jan. 1 Delivery Equipment P160,000.00
Cash P160,000.00
Delivery equipment payment.

Dec. 31 Depreciation Expense-Delivery Equipment 50,000.00


Accumulated Depreciation-Delivery Equipment 50,000.00
To record the allocated depreciation for the year.

SOLUTION: STRAIGHT LINE BASIS


Asset Cost: 160,000.00
Less: Salvage Value 10,000.00
Depreciation Amount: 150,000.00
Divided by: Estimated Useful Life (Years) / 3 years
Depreciation Expense Annually: 50,000.00
Abubakar Carias
Bachelor of Science in Accountancy
ACC111-1378
Financial Accounting and Reporting

DATE PARTICULARS DEBIT CREDIT


2014
Apr. 1 Cash P18,000.00
Unearned Service Income P18,000.00
Received cash for future services.

Dec 31 Unearned Service Income 13,500.00


.
Service Income 13,500.00
To recognize the earned portion.

SOLUTION: APRIL-DECEMBER=9 MONTHS or ¾ of a year/3 QUARTERS


18,000x3/4=13,500.00 WORTH OF EARNED SERVICE

DATE PARTICULARS DEBIT CREDIT


2014
Apr. 1 Supplies P6,400.00
Accounts Payable P6,400.00
Purchased supplies on account.

Dec. 31 Supplies Expense 5,650.00


Supplies 5,650.00
To record used supplies.

SOLUTION: 6,400 TOTAL WORTH OF SUPPLIES TO BE PAID – 750 WORTH OF


REMAINING SUPPLIES ON HAND = 5,650 WORTH OF SUPPLIES used.

DATE PARTICULARS DEBIT CREDIT


2014
May 1 Certificate Deposit P90,000.00
Cash P90,000.00
Investment in May.

Dec. 31 Accrued Interest Income/Receivable 2,400.00


Interest Income 2,400.00
Accrual interest of deposit.

SOLUTION: May-December=8 months or 2/3 of a year


90,000x4% interest= 3,600 annually.
3,600x2/3 = 2,400.00 accrued interest receivable for 8 months of deposit.
Abubakar Carias
Bachelor of Science in Accountancy
ACC111-1378
Financial Accounting and Reporting

DATE PARTICULARS DEBIT CREDIT


2014
Sep. 1 Prepaid Lease-Office Space P78,000.00
Cash P78,000.00
Prepaid lease payment.

Dec. 31 Lease Expense-Office Space 26,000.00


Prepaid Lease- Office Space 26,000.00
To recognize the expired portion.

SOLUTION: SEPTEMBER-DECEMBER=4 MONTHS OR 1/3 OF A YEAR


78,000x1/3=26,000 consumed portion of the prepaid lease-office space.

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