ALYSSA C.

DEL PILAR BSA-1 BRFABM1 225

UNIT 5: Analyzing Business Transactions

On the space provided, indicate whether the normal balance of each of the given account is a Debit or Credit.

1. Notes Receivable- Debit 6. Insurance Expense- Debit

2. Taxes and Licenses- Debit 7. Interest Income- Credit

3. Cash in Bank- Debit 8. Unused Supplies- Debit

4. Accounts Payable- Credit 9. Alex Ajoc, Drawing- Debit

5. Alex Ajoc, Capital - Credit 10. Prepaid Insurance- Debit

THEORY QUESTIONS:
Answer the following questions and provide the necessary requirements.

1. Notes Payable- Credit 6. Supplies Used- Debit

2. Prepaid Rent- Debit 7. Office Equipment- Debit

3. Interest Expense- Debit 8. Salaries and Wages- Debit

4. Professional Income- Credit 9. Rent Expense- Debit

5. Utilities Expense- Debit 10. Land- Debit

On the space provided, indicate a check mark as to the effect on the balances of the following accounts.

Increased Decreased
1. Notes Receivable account was debited
2. Accounts Payable account was debited
3. Meriam Narbarte, capital account was debited
4. Rent Expense account was debited
5. Petty cash account was debited
6. Accounts Receivable account was debited
7. Meriam Narbarte, Drawing account was debited
8. Accounts Payable account was credited
9. Prepaid Insurance account as credited
10. Insurance Expense account was debited
Place a on the appropriate column opposite each given data to correctly describe the effect of the related account.

Related Accounts Debit Credit

1. Increase in Revenue
2. Decrease in Cash
3. Increase in Accounts Receivable
4. Increase in Insurance Expense
5. Decrease in Revenue

On the space provided, indicate a on what has been done in each of the account which resulted to have increased or
decreased in its balance.
Debited Credited
1. Casiano Rebucas, Capital account increased by P1,500.
2. Prepaid Insurance Account decreased by P3,000.
3. Accounts Receivable account increased by P300.
4. Accounts Payable account decreased by P750.
5. Cash in Bank account decreased by P8,450.
6. Accounts Payable account increased by P10,050.
7. Accounts Receivable account decreased by P500.
8. Rent Expense account increased by P250.
9. Service Income account increased by P700.
10. Salaries Expense account increased by P5,000
ALYSSA C. DEL PILAR BSA-1 BRFABM1 225

UNIT 6: Double Entry System

Determine the effects (increase/decrease) of the following Transactions on the elements Financial Statements.

1. Bought office equipment on account.

Increase in Asset and Increase in Liability

2. Billed a costumer for services rendered.

Increase in Asset and Increase in Revenue

3. The proprietor invested cash in the business.

Increase in Asset and Increase in Capital

4. Bought office furniture in Cash.

Increase in Asset and Decrease in Asset

5. The proprietor withdrew cash from the business.

Increase in Drawings and Decrease in Asset

THEORY QUESTIONS:

A. Answer the following questions and provide the necessary requirements.

1. Paid Taxes and Licenses to the city government.

Increase in Expense and Decrease in Asset

2. Rendered professional service in cash.

Increase in Asset and Increase in Revenue

3. Bought office supplies (inventory) on account.

Increase in Asset and Increase in Liability

4. Paid insurance premium in advance.

Increase in Asset and Increase in Insurance Expense

5. Received cash for the service to be rendered.

Increase in Asset and Increase in Revenue

6. Collected the account from a costumer.

Decrease in Asset and Increase in Asset
B. The formation of Accounting Equation is presented below. Fill in the amounts in each of the Accounting Value affected by
the given transactions. For your guide, the BALANCES of each value is already given and transaction No. 1 is answered. Use a
parenthesis sign for the decrease.

Transactions Assets = Liabilities + Capital

1. Mr. Dexter Besinan invested cash in the P150,000 150,000

business, P150,000
2. Rendered service to a client on account,
P4,000
3. Bought computer on account, P40,000

4. Dexter Besinan withdrew cash P5,000

5. Paid office rental for the month, P1,000

6. Partial payment on account, P3,000

7. Dexter Besinan invested office table,

P10,000
8. Partial collection of a client’s account,
P2,000
9. Borrowed money from a bank and issued a
note, P10,000.
10. Partial payment on account, P2,000

11. Paid Taxes and licenses and other

assessments, P1,000
12. Paid the bank borrowed money P10,000

13. Received cash for services rendered,

P3,000
14. Bought office supplies on account, P5,000

15. Full payment of account (office Supplies),

P5,000
16. Received cash P10,000 but services have
not been yet rendered
BALANCES
B. The formation of Accounting Equation is presented below. Fill in the amounts in each of the Accounting Value
affected by the given transactions. For your guide, the BALANCES of each value is already given and transaction No. 1 is
answered. Use a parenthesis sign for the decrease.

Transactions Assets = Liabilities + Capital

1. Mr. Dexter Besinan invested cash in the P150,000 150,000

business, P150,000
2. Rendered service to a client on account,
P4,000
3. Bought computer on account, P40,000

4. Dexter Besinan withdrew cash P5,000

5. Paid office rental for the month, P1,000

6. Partial payment on account, P3,000

7. Dexter Besinan invested office table,

P10,000
8. Partial collection of a client’s account,
P2,000
9. Borrowed money from a bank and issued a
note, P10,000.
10. Partial payment on account, P2,000

11. Paid Taxes and licenses and other

assessments, P1,000
12. Paid the bank borrowed money P10,000

13. Received cash for services rendered,

P3,000
14. Bought office supplies on account, P5,000

15. Full payment of account (office Supplies),

P5,000
16. Received cash P10,000 but services have
not been yet rendered
BALANCES
B. The formation of Accounting Equation is presented below. Fill in the amounts in each of the Accounting Value
affected by the given transactions. For your guide, the BALANCES of each value is already given and transaction No. 1 is
answered. Use a parenthesis sign for the decrease.

Transactions Assets = Liabilities + Capital

1. Mr. Dexter Besinan invested cash in the P150,000 150,000

business, P150,000
2. Rendered service to a client on account, 4,000 4,000
P4,000
3. Bought computer on account, P40,000 40,000 40,000

4. Dexter Besinan withdrew cash P5,000 (5,000) (5,000)

5. Paid office rental for the month, P1,000 (1,000) (1,000)

6. Partial payment on account, P3,000 (3,000) (3,000)

7. Dexter Besinan invested office table, (10,000) 10,000

P10,000
8. Partial collection of a client’s account, 2,000 (2,000)
P2,000
9. Borrowed money from a bank and issued a 10,000 10,000
note, P10,000.
10. Partial payment on account, P2,000 (2,000) (2,000)

11. Paid Taxes and licenses and other (1,000) (1,000)

assessments, P1,000
12. Paid the bank borrowed money P10,000 (10,000) (10,000)

13. Received cash for services rendered, 3,000 3,000

P3,000
14. Bought office supplies on account, P5,000 5,000 5,000

15. Full payment of account (office Supplies), (5,000) (5,000)

P5,000
16. Received cash P10,000 but services have 10,000 10,000
not been yet rendered
BALANCES P195,000 P45,000 P150,000
C. Presented below are the transactions done by Ms. Virginia Ruben:

1. Ms. Virginia Ruben invests cash in the business where she opened an account with Bank of the Philippines Islands,
P250,000.
2. Withdraw cash from the bank to pay for the business permits to the city government, P5,000.
3. Received cash for services rendered and deposited to the bank, P4,000.
4. Bought office supplies in account from A. Suazo Co., P2,000.
5. Withdraw cash from the bank for her personal use, P10,000.
6. Withdraw cash from the bank for partial payment of account with A. Suazo Co., P1,000.
7. Rendered services on account to various clients, P3,500.
8. Withdraw cash from the bank for payment of salaries to her employees, P10,000.
9. Collected P2,000 from client’s account and immediately deposited to the bank.

Transaction Value Received Value Parted with

No. or Debit Amount= or Credit Amount
1 P250,000
2 P5,000
3 P4,000
4 P2,000
5 P10,000
6 P1,000
7 P3,500
8 P10,000
9 P2,000
D. The information of an Accounting Equation is presented below. Fill in the amounts in each of the Accounting Value
affected by the given transactions. For your guide, the BALANCES of each value is already given and Transaction No. 1 is
already answered. Use parenthesis sign for the decrease.

Transactions Assets = Liabilities + Capital

1. Mr. Dexter Besinan invested cash in the 150,000 150,000

business, P150,000
2. Rendered service to a client on account, 4,000
P4,000
3. Bought computer on account, P40,000 40,000 40,000

4. Dexter Besinan withdrew cash P5,000 (5,000) (5,000)

5. Paid office rental for the month, P1,000 (1,000) (1,000)

6. Partial payment on account, P3,000 (3,000) (3,000)

7. Dexter Besinan invested office table, 10,000

P10,000
8. Partial collection of a client’s account,
P2,000
9. Borrowed money from a bank and issued a 10,000 10,000
note, P10,000.
10. Partial payment on account, P2,000 (2,000) (2,000)

11. Paid Taxes and licenses and other (1,000) (1,000)

assessments, P1,000
12. Paid the bank borrowed money P10,000 (10,000) (10,000)

13. Received cash for services rendered, 3,000 3,000

P3,000
14. Bought office supplies on account, P5,000 5,000 5,000

15. Full payment of account (office Supplies), (5,000) (5,000)

P5,000
16. Received cash P10,000 but services has not 10,000 10,000
been yet rendered
BALANCES P45,000
P200,000 P155,000
ALYSSA C. DEL PILAR BSA-1 BRFABM1 225

UNIT 7: Journalizing, Posting and Trial Balance

Allen Monta opens a laundry shop business in Valencia City. The following were the transactions for the first
month of operation:

July 1- Opened an account with Union Bank, P350,000.

2- Acquired Laundry Equipment costing P75,000, paying cash of P25,000 and issued a
note for the balance.
5- Bought a second-hand delivery van on account, P65,000.
9- Bought laundry supplies for cash, P25,000
15- Rendered laundry services to various hotels in the city and received cash, P30,000 and on account, P15,000
17- Paid light and water expense, P6,000. (utilities expense)
19- Full payment of laundry equipment, P25,000
21- Withdraw cash of P5,000 for her personal use.
22- Billed a customer for services rendered, P25,000
25- Paid rental for the month, P4,000
28- Collected P10,000 from the costumer’s account of July 15
31- Paid salaries for the month, P8,000
31- Paid telephone bills, P4,000
31- Received Cash P15,000 but services has to be rendered yet.

Required:

1. Prepare a journal entry sung a 2-column general journal. Use the following list of account titles and prepare a T-
account for each.

Cash in the Bank; Receivable Laundry; Laundry Supplies Inventory; Laundry Equipment; Delivery Van;
Accounts Payable; Notes Payable; Notes Payable; Unearned Laundry Revenue; A. Monta, Capital; A. Monta, Drawing;
Laundry Revenue; Rent Expenses; Salaries Expense; Telephone Expense and Utilities Expense

2. Post the entries to the T-account and foot.

3. Prepare a trial balance.

DATE Account Titles Debit Credit
July
1 Cash in Bank P350,000
A. Monta, Capital P350,000
2 Laundry Equipment P75,000
Cash in Bank P25,000
Notes Payable P50,000
5 Delivery van P65,000
Accounts Payable P65,000
9 Laundry Supplies Inventory P25,000
Accounts Payable P25,000
15 Cash in Bank P30,000
Accounts Receivable P15,000
Laundry Revenue P45,000
17 Utilities Expense P6,000
Cash in Bank P6,000
19 Accounts Payable P25,000
Cash in Bank P25,000
21 A. Monta, Drawing P5,000
Cash in Bank P5,000
22 Accounts Receivable P25,000
Laundry Revenue P25,000
25 Rent Expense P4,000
Cash in Bank P4,000
28 Cash in Bank P15,000
Accounts Receivable P15,000
31 Salaries Expense P8,000
Cash in Bank P8,000
31 Telephone Expense P4,000
Cash in Bank P4,000
31 Cash in Bank P15,000
Unearned Laundry Revenue P15,000
Cash n Bank Laundry Revenue
350,000 25,000 45,000
30,000 6,000 25,000
15,000 25,000 70,000
15,000 5,000
4,000 Rent Expense
8,000 4,000
4,000
333,000 Telephone Expense
4,000
Accounts Receivable
15,000 15,000
25,000 Salaries Expense
25,000 6,000

Laundry Supplies Inventory Utilities Expense

25,000 6,000

Laundry Equipment A. Monta, Capital

75,000 350,000

Delivery Van a. Monta, Drawing

65,000 5,000

Accounts Payable
25,000 65,000
25,000
65,000

Notes Payable
50,000

Unearned Laundry Revenue

15,000
 Allen Montano Laundry Shop
Unadjusted Trial Balance
July 31,2020
Debit Credit
Cash in Bank 333,000
Accounts Receivable 25,000
Laundry Supplies Inventory 25,000
Laundry Equipment 75,000
Delivery Van 65,000
Accounts Payable 65,000
Notes Payable 50,000
Unearned Laundry Equipment 15,000
A, Monta, Capital 350,000
A. Monta, Drawing 5,000
Laundry Revenue 70,000
Rent Expense 4,000
Salaries Expemse 8,000
Telephone Expense 4,000
Utilities Expense 6,000
Total 550,000 550,000
ALYSSA C. DEL PILAR BSA-1 BRFABM1 225

UNIT 7: Journalizing, Posting and Trial Balance

PROBLEM SOLVING

Problem 1: Engr. Eliseo D. Diola II was engaged in an electrical installation business. It was already his second year of
operation and all the account balances at the beginning of January 1, 2014 are shown as follows:

Cash in Bank 980,000

Accounts Receivable 210,000
Electrical Supplies Inventory 70,000
Electrical Equipment Devise 750,000
Accounts Payable 80,000
Unearned Installation Income 50,000
e. Diola II, Capital 1,880,000

January 2- Engr. Diola withdrew P50,000 from his bank account for his personal use.
6 - Received P30,000 from Josephne Rosete representing her advance payment for electrical installation to be
rendered in a later date.
8- Partial collection of account from various clients, P140,000
10- Purchase various electrical supplies on account from Christy Sanosa, 10,000
13- Partial payments to accounts on various suppliers, P55,000
15- Rendered electrical installation service on account to Edmond Biongan, P151,000.
20- Rendered electrical installations service to Emma Gatmaitan, P50,000 which she already paid in advance last
month. (see balances of accounts)
23- Partial collection from Edmond Biongan’s account, P6,000
26- Partial payment of account to Christy Samosa, P2,000
27- Paid the city government for business permit’s, etc., P10,000
31- Paid salaries to engineering staff, P47,000

Required:
1. Journalize the above transactions using General Journal
2. Post the entries using T-accounts
3. Foot and prepare trial balance
 Account Titles Debit Credit
DATE
Jan
2 Engr. D, Drawing P50,000
Cash P50,000
6 Cash P30,000
Unearned Installation Income P30,000
8 Cash 140,000
Accounts receivable 140,000
10 Electrical Supplies Inventory 10,000
Accounts Payable 10,000
13 Accounts Payable P55,000
Cash 55,000

15 Accounts Receivable 151,000

Electrical Installation Service Income 151,000

20 Unearned Installation Income 50,000

Electrical Installation Service Income 50,000
23 Cash P6,000
Accounts Receivable 6,000
26 Accounts Payable 2,000
Cash 2,000
27 Taxes and Licenses 10,000
Cash 10,000
31 Salaries Expense 47,000
Cash 47,000
Cash in Bank Electrical Installation Service Income
980,000 50,000 151,000
30,000 55,000 50,000
140,000 2,000 201,000
6,000 10,000
47,000 Salaries Expense
992,000 47,000

Taxes and Licenses

Accounts Receivable
10,000
210,000 140,000
151,000 6,000
Engr. Diola Drawing
215,000
50,000
Electrical Supplies Inventory
70,000
10,000
80,000

Electrical Equipment Devise

750,000

Accounts Payable
55,000 80,000
2,000 10,000
33,000

Unearned Installation Income

50,000 50,000
30,000
30,000

Engr. Diola Capital

1,880,000
 Engr. Eliseo D. Diola II Electrical Installation Business
Unadjusted Trial Balance
January 31,2014
Debit Credit
Cash in Bank 992,000
Accounts Receivable 215,000
Electrical Supplies Inventory 80,000
Electrical Equipment Devise 750,000
Accounts Payable 33,000
Unearned Installation Income
30,000 Engr. Diola II , Capital
1,880,000 Electrical Installation Service Income
201,000 201, Engr. Diola II , Drawing
50,000 xxxxxxx
Taxes and Licenses 10,000
Salaries Expense 47,000
Total P2,144,000 P2,144,000
Problem 2: Atty. Richard T. Opinion opens a modern barbershop in General Santos City under the business name of Macho
Barber Shop. The completed transactions for the first month of operations are all to be recorded in the General Journal
based on the following chart of accounts.

Asset Liabilities and Owner’s Equity

Cash in Bank Accounts Payable
Petty Cash Fund R. Opinion, Capital
Accounts Receivable R. Opinion, Drawing
Shop Supplies Inventory Service Income
Barber Shop Equipment Rent Expense
Shop Furniture and Fixture Salaries and Expense
Taxes and Licenses

April 1- Attorney Opinion deposited P800,000 with Land Bank of the Philippines which he later withdrew P5,000
for petty cash fund established for small and petty expenses.
3- Purchased air-conditioning units and barber’s chairs worth P50,000 paying P300,000 as down payment and
the balance payable on June 15 (Why there is no transaction on June 15?)
4- Purchased mirrors, various furniture and framers on account from Mayette Corporal, P130,000
Purchased barber shop supplies such as talcum powder, alcohol, cotton, soap, towels, cloth and other
toiletries on account from Lynn Facturan, P35,000
5- Paid building rental P2,500. Cash was taken from petty cash fund.
6- Withdrew the amount of P10,500 from the bank to pay for the business permits and other governmental dues.
12- Income of the week:
Cash Basis P50,000
On account 3,500
18- Withdrew the amount of P10,00 from the bank for personal use of Atty. Opinion
19- Income of the week:
Cash Basis P65,000
On Account 4,000
20- Withdrew the amount of P35,000 from the bank to pay for the account with Lynn Facturan
21- Additional investment of Atty. Opinion, P100,000 in the form of cash deposit to Land Bank of the Philippines
25- Collected the amount of P3,500 for services rendered on April 12 .
26- Income of the week:
Cash Basis P45,000
On account 10,000
29- Withdrew the amount of P65,000 from the bank in partial payment of account to Mayette Corporal.

Required:
1. Journalize the above transactions
2. Create T-account based on the given chart
3. Prepare the trial balance.
 Account Titles Debit Credit
DATE
April
1 Cash in Bank P800,000 P5,000
Petty Cash Fund 5,000
R. Opinion Capital 800,000
3 Barber Shop Equipment 500,000
Cash 300,000
Accounts Payable 200,000
4 Shop Furniture and Fixture 130,000
Shop Supplies Inventory 35,000
Accounts Payable 165,000
5 Rent Expense 2,500
Petty Cash Fund 2,500
6 Taxes and Licenses 10,500
Cash in Bank 10,500
12 Cash in Bank 50,000
Accounts Receivables 3,500
Service Income 53,500
18 R. Opinion, Drawing 10,000
Cash in Bank 10,000
19 Cash in Bank 65,000
Accounts Receivables 4,000
Service Income 69,000
20 Accounts Payable 35,000
Cash in Bank 35,000
21 Cash in Bank 100,000
R. Opinion Capital 100,000
25 Cash in Bank 3,500
Accounts Receivables 3,500
26 Cash in Bank 45,000
Accounts Receivables 10,000
Service Income 55,000
29 Accounts Payable 65,000
Cash in Bank 65,000
Cash in Bank
Accounts Payable
800,000 5,000
35,000 200,000
50,000 300,000
65,000 165,000
65,000 10,500
265,000
100,000 10,000
3,500 35,000
R. Opinion, Capital
45,000 65,000
800,000
638,000
100,000
900,000
Petty Cash Fund
5,000 2,500
2,500

Accounts Receivable R. Opinion, Drawing

10,000
3,500 3,500
4,000 Service Income
10,000
53,500
14,000 69,000
55,000
Shop Supplies Inventory
35,000
Rent Expense
Barber Shop Equipment 2,500
500,000
Salaries and Expense
Furniture and Fixture
130,000

Taxes and Licenses

10,500
 Atty. Richard T. Opinion Macho Barber Shop
Unadjusted Trial Balance
April 30 (No year Mentioned I think)
Debit Credit
Cash in Bank P638,000
Petty Cash Fund 2,500
Accounts Receivable 14,000
Shop Supplies Inventory 35,000
Barber Shop Equipment 500,000
Shop Furniture and Fixture 130,000
Accounts Payable P265,000
R. Opinion, Capital 900,000
R. Opinion, Drawing 10,000
Service Income 177,500
Rent Expense 2,500
Salaries Expense
Taxes and Licenses 10,500
Total P1,342,500 P1,342,500
ALYSSA C. DEL PILAR BSA-1 BRFABM1 225

UNIT 8: Adjusting Entries and Adjusted Trial Balance

On August 1, 20A, Naneth Cabural Co. insured its property with Consolidated Insurance Company and pays premium of
P24,000 for a one-year policy contract covering the period from August 1, 20A to August 1, 20B. The accounting periods
on December 31, 20A.

Assuming Expense Method is used:

1. What is the journal entry to record the prepayment?
Insurance Expense P24,000
Cash in Bank P24,000

2. In your adjusting entry, what account will you record?

Asset

3. What is the adjusting entry on December 31, 20A?

Prepaid Insurance Expense P14,000
Insurance expense P14,000

4. In your adjusting entry, are you increasing or decreasing the amount of your Insurance Expense account?
Decreasing

Assuming Asset Method is used:

1. What is the journal entry to record the prepayment?
Prepaid Insurance P24,000
Cash in Bank P24,000

2. In your adjusting entry, what account will you record?

Expense

3. What is the adjusting entry on December 31, 20A?

Insurance Expense P10,000
Prepaid Insurance P10,000

4. In your adjusting entry, are you increasing or decreasing the amount of your Prepaid Insurance account?
Decreasing
ALYSSA C. DEL PILAR BSA-1 BRFABM1 225

UNIT 8: Adjusting Entries and Adjusted Trial Balance

PROBLEM SOLVING

Problem 1:
Nestor Alegre has insured his truck and building with Stronghold Insurance Co. The following date relates to the
insurance coverage and premium payments:
Property Insured Date of Coverage Amount Paid
Building June 1, 20A- June 1, 20B P12,000
Truck Oct. 1, 20A- Oct. 1, 20B 6,000

How much is the expired portion of the Insurance premium payment on December 31, 20A?
Building 12,000 x 7/12 = 7,000
Truck 6,000 x 3/12 = 1,500
Total = 8,500

At what amount will the prepaid insurance or unexpired insurance show the Balance Sheet as of December 31, 20A?
Total Premium Paid 18,000
Less: expired portion 8,500
Unexpired Premium 9,500

Assuming that the insurance of the building was paid on May 28, 20A (ahead of the Insurance coverage date) using the
asset method, what is the adjusting entry on December 31, 20A?
Insurance Expense 7,000
Prepaid Insurance 7,000

Assuming that the insurance of the truck was paid on October 2, 20A (one day late of the insurance coverage date)
using the expense method, what is the adjusting entry on December 31, 20A?
Prepaid Insurance 4,500
Insurance Expense 4,500

Problem 2:
On October 1, 20A, Myvi Mascarinas Realty Co. collected the amount of P180,000 representing advanced rental from a
tenant who occupies a space of the building. The advanced rental will cover the period from Oct. 1, 20A to Oct. 1, 20B.
The accounting period end on December 31, 20A

Assuming that income method is used:

1. What is journal entry to record pre-collection?
Cash 180,000
Rental Income 180,000

2. In your adjusting record, what account will you record, Income or liability?
Liability or the Unearned Portion

3. What is the adjusting entry on December 31, 20A?

Rental Income 135,000
Unearned Rental Income 135,000
(180,000 x 9/12 = 135,000)

4. In your adjusting entry, are you increasing or decreasing the amount of your rental income account?
Decreasing
Assuming that Liability Method is used:
1. What is the journal entry to record pre-collection?
Cash 180,000
Unearned Reantal Income 180,000

2. In your adjusting entry, what account will you record, Income or Liability?
Income or the Earned Portion

3. What is your adjusting entry on December 31, 20A?

Unearned Rental Income 45,000
Rental Income 45,000
(180,000 x 3/12= P45,000)

4. In your adjusting entry are you increasing or decreasing the amount of your Unearned Rental Income account?
Decreasing

Problem 3:
Valiant Security Services, owned and managed by Rembert Suico, bought office supplies costing P15,000. The purchase
was recorded by a debit to an account “unused supplies”. At the end of the accounting period, it was ascertained that
P4,000 cost of supplies were on hand.

Q-1 What method or approach was used in recording the purchase of supplies?
Asset Method

Q-2 At the end of the accounting period-

a. How much is the expense (used) portion?
Supplies Expense 4,000
b. How much is the asset (unused) portion?
Unused Supplies 4,000

Q-3 What is your adjusting journal entry?

Debit – Supplies Used 4,000
Credit- Unused supplies 4,000

Q-4 In your adjusting entry, are you increasing or decreasing the original balance of the “Unused Supplies” account?
Decreasing

Q-5 After your adjusting journal entry-

a. What is the amount of “unused supplies” to be shown in the Balance Sheet?
Unused Supplies in the Balance Sheet , P11,000
b. What is the amount of “supplies used” account to be shown in the Income Statement?
Supplies Used in the Income Statement, P4,000

Problem 4:
The preliminary trial balance of Tagum Traders, owned by Merry Chris Ceniza as of December 31, 20A showed in part the
accounts receivable and its related estimated uncollectible accounts:
Debit Credit
Accounts Receivable P300.000
Estimated Uncollectible Account 4,000
If at the end of the year, the estimated Uncollectible Account is to be provided at 3% of its outstanding receivable, what
would the amount of adjustment be?
Estimated Uncollectible Account (3%) 9,000
Ledger Balance EUA 4,000
Adjustment 5,000

What is the required adjusting entry on December 31, 20A?

Uncollectible Account 5,000
Est. Uncollectible Account 5,000

What is the Estimated Realizable Value of the accounts receivable as of Dec. 31, 20A?
Accounts Receivable, 12/31 300,000
Est. Uncollectible Account 9,000
Carrying Value 291,000

If the estimated Uncollectible Account should be “increased by” 2% of the outstanding receivable account, what should
be the adjusting entry needed?
Uncollectible Account 6,000
Est. Uncollectible Account 6,000
(P300,000 x 2%= P6,000)

If the estimated Uncollectible Account should be “increased by” 2% - of the outstanding receivable account, what should
be the adjusting entry needed?
Uncollectible Account 2,000
Est. Uncollectible Account 2,000
(P300,000 x 0.02) P4,00= P2,000

Problem 5:
The following data is taken from V. Ayuban Convenience Store for the year ended December 31, 20A before adjustment
was prepared:
Debit Credit
Accounts Receivable P100,000
Estimated Uncollectible Accounts P1,000
Details of Accounts Receivable follows:
J. Japad Enterprises P30,000
E. Claudel Trading P50,000
M. Poliran Merchandising P20,000
Aging of Accounts Receivable revealed the following:
Collectible Rate 99% 98%
Receivable as aged 1-60 days 61-120 days
J. Japad Enterprise P25,000 P5,000
E. Claudel Trading P20,000 P30,000
M. Poliran Merchandising P10,000 P10,000

How much is the estimated uncollectible account as per aging made?

Customers 1-60 days 61-120 days total
Japad Enterprise P25,000 P5,000 P30,000
E. Claudel Trading P20,000 P30,000 P50,000
M. Politan Merchandising P10,000 P10,000 P20,000
Totals P55,000 P45,000 P100,000
Uncollectible Rate 1% 2%
Estimated Uncollectible Account P550 P900 P1,450
What is the adjusting entry to record the Estimated Uncollectible Account as of Dec. 31, 20A?
Uncollectible Account P1,450
Est. Uncollectible Account P1,450

What is the Estimated Realizable Value of accounts Receivable as of December 31, 20A?
Total Accounts Receivable P100,000
Less: Est. Uncollectible Account P1,450
Carrying Value or Est. Realizable Value P98,550

Problem 6:
On October 1, 20A Valencia Salon and Spa owned Susan de la Fuente bought an brand new “Koppel” air-conditioning unit
for P280,000. Freight on shipment is P2,000 and installation cost is P8,000. The unit has an estimated life of 10 years and
has a salvage value of P10,000 at the end of its life. The accounting period ends on December 31, 20A.

Answer the following questions:

What is the journal entry to record the coast equipment together with the incidental coast?
Store Equipment P290,000
Cash P290,000

How much is the computed annual depreciation?

Depreciation= (290,000-10,000)/10
= 280,000/ 10
= P28,000 per year

How much is the computed depreciation on Dec. 31, 20A?

Depreciation= [(290,000-10,000)/10] x (3/12)
= (280,000/10) x (3/12)
= 28,000 x (3/12)
= P7,00

What is the adjusting entry to record the depreciation on Dec. 31, 20A?
Depreciation Expense 10,000
Accumulated Depreciation 10,000

What is the “net book value” the equipment as of December 31, 20A?
Cost 290,000
Accumulated Depreciation 10,000
Carrying Value/ Net Book Value 280,000

Problem 7:
From the following given data, prepare adjusting journal entries for the year ended December 31, 20A:

Purchase of supplies for P3,000. At the end of the year, P1,000 cost of supplies were actually used. Expense method was
used in payment supplies.
A P48,000, 120-day note was received from a client dated Nov. 1, 20A. The interest was not yet collected at the end of the
accounting period.

Before adjustments, the balance of laundry supplies inventory was P35,000. Physical count of supplies inventory was
P15,000.

An office equipment was acquired on May 31, 20A for P150,000. The office equipment as an estimated life of 5 years
without scrap value.

A copying machine was rented on Nov. 30, 20A at P1.00/ copy of production. It reported to have produced 300 copies as of
December 31, 20A. No payment was made as of this date.

Signed an advertising contract on Dec. 1, 20A with a radio station for P3,500. The contract will commence upon a payment

on December 15, 20A and will terminate on January 15, 20B. Expense method is used in recording prepayment.

Supplies an advertising showed a balance of P40,000 as of December 31, 20A. During the year P25,000 cost of supplies
were purchased and at the end of December 31, 20B, P20,000 were found to be on land.
ALYSSA C. DEL PILAR BSA- 1 BRFABM1 225

FINAL OUTPUT

Adjustments to Adjusted Trial Balance

Corazon Tabaranza
Preliminary Trial Balance
December 31, 20A

Debit Credit Debit Credit Debit Credit

Cash in Bank 7,000 10,000 172,000
P175,000
Accounts Receivable
ACCOUNT TITLE 80,000
Trial Balance Adjustments 80,000 Trial Balance
Adjusted
Est. Uncollectible Accounts 500 300 800
Supplies Inventory 25,000 15,000 10,000

Office Equipment
160,000 160,000
Acc. Dep’n- Office 16,000 16,000
Equipment
Accounts Payable 50,000 10,000 40,000

Accrued Salaries Expense 14,000 14,000

Tabaranza, Capital 382,500 328,500

Service Income 85,000 7,000 92,000

Uncollectible Accounts 300 300
Depreciation Expense 16,000 16,000

Salaries Expense 24,000 14,000 38,000

Supplies Used 15,000 15,000
TOTAL P 464,000 P 464,000 P62,300 P62,300 P491,300 P 491,300
The following omissions were discovered in the course of your examination:

1. Cash received from a customer for services rendered was not recorded in the book.
This was discovered by Cash Sales Invoice #0132 dated December 31, 20A, P7,000

2. Estimated Uncollectible Accounts should be adjusted to equal to 1% of the outstanding accounts receivable.

3. Office Equipment was acquired on July 1, 20A with an estimated life of 5 years without scrap value.

4. Payment to a supplier’s account in the amount of P10,000 was inadvertently omitted. This was covered
by Check Voucher #018 dated December 31, 20A.

5. Supplies that were actually on hand when physical accounting was made, P10,000.

6. Unpaid salaries as of Dec. 31, 20A, P14,000

Required: Prepared an adjustment trail balance. (Use letter-sequencing in your adjusting entry)