Exercises are from the book (Fundamentals of Accounting by Beticon, Hinayon, Irineo)

Ex # 1 REQUIRED: Prepare the adjusting journal entries based on the given

independent situations as of December 31, 2012:

1. The Prepaid Insurance account had a debit balance on December 31 of P36,000 representing
premium for a 12 month fire insurance policy effective September 1, 2012;

2. On December 31 there is a 60 day 6% note payable to ABC Company issued on November 12, 2012
for P120,000. No interest has been taken on this note;

3. Commissions Income account showed a credit balance of P 26,000 per general ledger as of
yearend. Of this only 40% has been actually earned during the current year;

4. The following accounts are given as of yearend:

Accounts Receivable P360,000
Allowance for doubtful accounts 30,000
It was agreed that uncollectible accounts are estimated to be equivalent to 18% of outstanding
accounts receivable.

5. Depreciation of Equipment acquired on May 1 with a cost of P76,000 had not been recorded in the
books. Estimated life of equipment is 5 years with scrap value of P P1,800;

6. Unearned rent income was credited for P48,000 on November 1, representing 6 months’ rent
collected in advance;

7. Supplies costing P8,000 bought during the period was debited to the account Supplies expense of
which P 6,500 were consumed during the period;

8. Commissions already earned but not yet collected amounted to P18,000 as of the year-end.

9. Equipment per general ledger as of December 31 shows a balance of P186,000. Equipment

acquired during the period was P26,000 on October 1. All equipment is to be depreciated at the
rate of 20% per annum;

10. Store supplies recorded in the Store supplies account during the year P 12,400. As of December
31 store supplies unused is P4,800.

Ex # 2 REQUIRED: From the following information, prepare adjusting journal

entries on December 31, 2012, the end of the accounting period:

a. Unrecorded salaries, P145,000.

b. Accrued interest on notes from customers, P15,000.
c. Accrued interest on notes to suppliers, P50,000.
d. Equipment was acquired on July 1, 2012, for P80,000. The useful life of equipment is five
years, at the end of which it is expected to be sold for P20,000.
 e. A room of the building is being leased to a tenant at P7,500 a month. On December 31,
2012, the record shows that the tenant is three months in arrears in the payment of rent.
f. Depreciation of delivery equipment is 10% per annum. The ledger balance of the account
is P250,000, acquired on April 1, 2012.
g. On December 1, a customer issued a 60-day, 18% note for P60,000. The principal and the
interest will be collected on the maturity date.

Ex # 3 Presented below is the unadjusted trial balance of Helper Company for

the year ended December 31, 2012:

Helper Company
Unadjusted trial balance
December 31, 2012

Dr. Cr.
Cash on hand and in banks P 189,000
Accounts receivable 967,500
Office supplies on hand 94,500
Rent paid in advance 540,000
Furniture and fixtures 3,262,500
Accumulated depreciation P 652,500
Accounts payable 427,500
24% Note payable 1,350,000
Aurora, Capital 2,842,500
Aurora, Personal 1,800,000
Service fee income 7,699,500
Salaries and wages 5,656,500
Heat, light and power 157,500
Taxes and licenses 139,500
Telephone expenses 165,000
P12,972,000 P12,972,000

Additional information:
 Office supplies on hand at December 31, 2012 amounted to P42,500.
 On October 30, 2012, Helper paid Lessor Company P540,000 for six month's worth of rent on the
office building, commencing on November 1, 2012.
 Depreciation expense for the furniture totaled P362,500 for Year 2012.
 As of December 31, 2012, the following expenses were still unrecorded and unpaid:
a) Salaries of employees for the second half of December, P157,500.
b) Telephone expenses for the month of December, P15,000.
c) Heat, light and power expenses for the second half of December, P28,000
d) Interest on the 24% note payable. The P1,350,000 note was issued to the Bank of the
Philippine Archipelago on November 1, 2012, and will be due in 12 months.

REQUIRED:
a. Prepare the necessary adjusting journal entries at period-end.
b. Prepare a revised trial balance at December 31, 2012 for the Helper Company.