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52 answers

Problem on acccrual

In the books of E. Gevera Realty Company

Lease Rent Receivable A/c Dr.

To Lease Rental Income A/c

(Lease Rent Receivable)

On receipt of the rent after year end

Bank A/c Dr.

To Lease Rental Receivable

(Lease Rent Received)

In the books of Metro Drug Company

Lease Rental Expense A/c Dr.

To Lease Rent Payable A/c

(Lease rent payable)

On payment after year end

Lease Rent Payable A/c Dr.

To Bank

(Lease Rent Paid)

Problem on deferrals

Expense Method

1. Insurance Expense A/c Dr. P24,000

To Bank A/c P24,000

(On payment of the premium)

2. The entire payment will be recorded in an expense account.

3. Adjusting entry on 31st December, 20A

Prepaid Insurance A/c Dr. P14,000

To Insurance Expense P14,000

4. Prepaid Insurance A/c is increased in the adjusting entry on 31st December, 20A

Asset Method

1. Prepaid Insurance A/c Dr. P24,000

To Bank A/c P24,000

(On payment of insurance premium)

2. The entire payment will be recorded in an asset account.

3. Adjusting entry on 31st december, 20A

Insurance Expense A/c Dr. P10,000

To Prepaid Insurance A/c P10,000

4. Insurance Expense account is increased in the adjusting entry on 31st December, 20A
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