BOOKKEEPING NC III

INSTITUTIONAL ASSESSMENT
July 12, 2021

PART II – ADJUSTING ENTRIES

1. The Domjae Shire Company started operations on October 1, 2020. On the same day, the company paid
insurance premiums on its building for one year in the amount of P9,600.00 which was immediately expensed
by the company accountant. If the company would prepare its year end financial statements, what would be
the necessary adjusting entry.

2. On July 1, 2020, the accountant of Domneil Jan Company debited an asset account for the 3-month rental of
its showroom along Session Room in the amount of P90,000. If the company president would like the
accountant to prepare financial statements for the month of July, 2020, what adjusting entry in needed to adjust
the insurance account.

3. On November 1, 2020, the Bob Rio Lending Company deducted the amount of P15,000.00 from the proceeds of
a short term six-month loan released to Mr. A, one of its borrowers or clients. The company accountant has
recorded the same in its books of accounts by immediately recognizing it as income. If the company would
prepare its year-end financial statements, what adjusting entry in necessary with respect to this transaction.

4. The Bob Meo Company has available spaces available for lease to interest lessees. On July 1, 2020, Bob Meo
entered into a two year lease contract with Mr. B, lessee, to commence on July 1, 2020 to July 1, 2022. On the
same day, Mr. B, paid the two year rental in the amount of P240,000 to Bob Meo Co., to which the company
accountant immediately credited to Unearned Rentals. What adjusting entry is necessary at the end of 2020.

5. Started business on December 2. On December 6 , the business acquired supplies worth P7,500 and debited
Supplies Expense and credited Accounts Payable. By December 31 remaining supplies unused is P3,700.

ANSWER SHEET:

Description Adjusting Entry Adjusting Entry Adjusting Entry Adjusting Entry Adjusting Entry
No. 1 No. 2 No. 3 No. 4 No. 5
Date of
Adjusting Entry

Account Debited

Account Credited

Amount of
Adjustment

‘ The gent who wakes up and finds himself a success hasn’t been asleep .’ Wilson Mizner

‘ The more we do, the more we can do.’ William Hazlitt

/DBAY-AN, CPA; MBA; REB; REA; LPT