a.

Paid P24, 000 for a 1-year fire insurance Normal Entry

policy to commence on Sept. 1. The amount of Supplies 6,400
premium was debited to Prepaid Insurance. Accounts Payable
6,400
Normal Entry
Prepaid Insurance 24,000 Adjusting Entry
Cash 24,000 Supplies Expense 5,650
Supplies
Adjusting Entry 5,650
Insurance Expense 8,000
Prepaid Insurance f. Invested 90,000 cash in a certificate of deposit
8,000 that paid 4% annual interest. The certificate was
acquired on May 1 and carried a 1-year term to
b. Borrowed P100, 000 by issuing a 1-year note maturity.
with 7% annual interest to Century Savings Bank
on Oct. 1, 2019. Normal Entry
Cash 90,000
Normal Entry Notes Payable 90,000
Cash 100,000
Notes Payable 100,000 Adjusting Entry
Interest Receivable 2,400

m
Adjusting Entry Interest Income

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Interest Expense 1,750 25,400

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Interest Payable g. Paid P78, 000 cash in advance on Sept. 1 for

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1,750 a 1-year lease on office space.

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c. Paid P160,000 cash to purchase a delivery Normal Entry
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van (surplus) on Jan. 1. The van was expected to Prepaid Rent 78,000
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have a 3-year life and a 10,000 salvage Cash 100,000
value. Depreciation is computed on a straight-
line basis. Adjusting Entry
Rent Expense 26,000
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Normal Entry Prepaid Rent 26,000

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Delivery Van 160,000

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Cash 160,000 a. The payment of the P19,000 insurance

premium for two years in advance was originally
Adjusting Entry recorded as Prepaid Insurance. One year of the
Depreciation Expense-Delivery Van policy has now expired.
50,000
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Accumulated Depreciation Normal Entry

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50,000 Prepaid Insurance 19,000

Cash 19,000
d. Received an P18,000 cash advance for a
contract to provide services in the future. The Adjusting Entry
is

contract required a 1-year commitment, starting Insurance Expense 8,000

April 1. Prepaid Insurance
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8,000
Normal Entry
Cash 18,000 b. All employees earn a total of P10,000 per day
Unearned Revenue for five-day week beginning on Monday and
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18,000 ending Friday. They were paid for the workweek

ending Dec. 26. They worked on Monday, Dec.
Adjusting Entry 29, Tuesday, Dec. 30 and Wednesday, Dec. 31.
Unearned Revenue 13,500
Service Revenue Normal Entry
13,500 Prepaid Insurance 24,000
Cash 24,000
e. Purchased P6,400 of supplies on account. At
year’s end, P750 of supplies remained on hand. Adjusting Entry
Insurance Expense 8,000
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 Prepaid Insurance
8,000

c. Supplies account had a year balance of P4,480

on Jan. 1. During the year, P11,000 of supplies
were bought. A year-end inventory showed that
6,400 worth of supplies are still on hand.

Normal Entry

Adjusting Entry
Supplies Expense 9,080
Supplies
9,080

d. Equipment costing P588,000 has a useful life

of five years with a P80,000 salvage value at the
end of five years. Record the depreciation for the
year.

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Normal Entry

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Equipment 588,000

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Cash 588,000

o.
Adjusting Entry
Depreciation Expense-Equipment
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101,600
Accumulated Depreciation
101,600
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DON’T JUST COPY

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THE ANSWERS
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If you want to
learn.
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TIP: STUDY AND

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PRACTICE &
PRACTICE &
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PRACTICE on your own!

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