2nd Flr, GF Partners Bldg, 139 H.V.

dela Costa, Salcedo Village, Makati City

Practical Accounting 1
Review of the Accounting Process 1.

Prof. R. M. Valdez

A business received cash of P300,000 in advance for service that will be provided later. The cash receipt entry debited Cash and credited Unearned Revenue for P300,000. At the end the period, P110,000 is still unearned. The adjusting entry for this situation will a. Debit Unearned revenue and Credit Revenue for P190,000 b. Debit Unearned revenue and Credit Revenue for P110,000 c. Debit Revenue and Credit Unearned Revenue for P190,000 d. Debit Revenue and Credit Unearned Revenue for P110,000

2.

Prepaid Insurance has an ending balance of P23,000. During the period, insurance in the amount of P12,000 expired. The adjusting entry would contain a debit to a. Prepaid insurance for P12,000 c. Prepaid insurance for P11,000 b. Insurance expense for P12,000 d. Insurance expense for P11,000 On December 31, Printshop Property management made an adjusting entry to record P30,000 management fees earned but not yet billed to a client. This entry was reversed on January 1. On January 15, the client paid P120,000, of which P90,000 was applicable to the period January 1 through January 15. The journal entry made by Printshop to record receipt of the P120,000 on January 15 includes a. A credit to Management Fees Earned of P120,000 b. A credit to Accounts Receivable of P30,000 c. A debit to Management Fees Earned of P30,000 d. A credit to Management Fees Earned of P90,000

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On December 31, Lotus made an adjusting entry to record P11,000 accrued interest payable on its note. This entry was reversed on January 1. On January 15, the note was paid. The payment included interest of P25,000. The entry to record the payment of January 15 should a. Debit Interest Expense of P25,000 b. Debit Accrued Interest Payable of P25,000 c. Debit Interest Expense of P14,000 and accrued Interest Payable of P11,000 d. Debit Interest Expense of P14,000 and credit accrued Interest Payable of P11,000. Windows Company sublet a portion of its office space for ten years at an annual rental of P360,000, beginning on May 1. The tenant is required to pay one year’s rent in advance, which Windows recorded as a credit to Rental Income. Windows reports on a calendar-year basis. The adjustment on December 31 of the first year should be a. Rental Income 120,000 Unearned Rental Income 120,000 b. Rental Income 240,000 Unearned Rental Income 240,000 c. Unearned Rental Income 120,000 Rental Income 120,000 d. Unearned Rental Income 240,000 Rental Income 240,000

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Dbase Company paid P170,400 on June 1, 2002, for a two-year insurance policy and recorded

b.000.300. c.000.000 d. adjusting entry is a.000.000 and credit Accounts Payable. P49. debit Supplies on Hand. P200.000.000 c.000.000. P87.000 and Office Supplies Expense of P101. The proper journal entry at the end of the period. debit Supplies on Hand. During the month. . Moon Company purchased equipment on November 1. the company’s net income and the year-end balance in the capital account were. P165. P165. 12.000. debit Prepaid Insurance and credit Insurance Expense.000. the bookkeeper overlooked the accrued wages at month-end of P30. The December 31. P7.000 c.470. P24.000. P120. The entry for that purchase was a.700 c. 9. debit Interest Expense and credit Interest Payable. P21.530. 2001. by giving their supplier a 12month.000. During the year.000. P43. P700. debit Supplies on Hand.250 of Supplies on Hand at the end of the period.000 and P750.000.000 liabilities of P1.000 and credit Accounts Payable. P45. After the December adjusting entries have been posted. P60.000.000 debit balance on January 1.000.000 Before any year-end adjustments were made.000. 10.970.100. incurred expenses of P3.200. P87.250 were purchased during the period and debited to Supplies on Hand.000.000 and net income of P500. P3. P2. respectively: a. 2002? 8. debit Supplies Expense. P130.000 and credit Accounts Payable. 2001. 9 percent note with a face value of P480. d. 11.000 c. P29.000 A law firm began November with office supplies of P16. the net income of Power Point Co.840. The December 31. c.780.000 d. services performed for clients but not yet collected. adjusting entry is a. On December 31 of the current year. Only one purchase of supplies was made during the month. The Supplies on Hand account had a P153.000 d. debits Supplies Expense and credits Supplies on Hand for P156.000 At December 31.500. P30.000 and P950. c. debit Insurance Expense and credit Prepaid Insurance. debit Interest Expense and credit Interest Payable. In preparing the statements. the net income would be: a. After recording these adjustments. what is the proper balance in the Office Supplies account on December 31. P600. and the balance in the cash account increased by P100. The Supplies on Hand account balance at the beginning of the period was P66. a. P1.600. P49.970.000 in assets.000 b. At November 30 supplies on hand total P21. debit Interest Expense and credit Cash.000. d.000. P87. debit Insurance Expense and credit Prepaid Insurance. was P4. balance sheet showed Supplies on Hand of P114.000 c. the firm purchased supplies of P29.700 7.200.000 and P850. debits Supplies on Hand and credits Supplies Expense for P156.000. b. Supplies totaling P128.000. P2. debits supplies on Hand and credits Supplies Expense for P90.000.000. P7. P10. At year-end.040. interest accrued on note payable. adjusting entry recorded office supplies expense of P17. the company earned revenue of P4.000.700 b.’s bookkeeper prepared financial statements which showed assets of P4. at the beginning of the year was P650. the unadjusted trial balance shows office supplies of P60. P4. the following adjustments were necessary: office supplies used.000. b.250. P87.000 and P950. Holmgren Company’s bookkeeper made an entry debiting Supplies Expense and crediting Supplies on Hand for P126. P4.000 d. 2002.700 d. The balance in the capital account of Wordstar Co. debit Interest Expense and credit Interest Payable.000. debit Prepaid Insurance and credit Insurance Expense. P87. P700. The adjusting entry at November 30 will result in supplies expense of a. debits supplies Expense and credits Supplies on Hand for P128.000.000 At the end of the first month of operations. A physical count shows P38.000 and credit Cash. Word Co. on account. However. d. the owner withdrew P500. 13.000 b. P2.000. 2002.200.000. The December 31.000 b. P3.000 b. The correct owner’s equity at month-end is a. P87.800. The December 31. 14. P120.Practical Accounting 1 Review of the Accounting Process page 2 the entire amount as Insurance Expense.

The note had an interest rate of 12 percent and called for three equal annual principal payments of P150. P1. P720.700 1.000. 2001. P1. and the P30. P1.500 and credit total was P1.000 c.000 for 1.532. P48.000 c. did not balance. P1. Winword prepares adjustments only at December 31. 19. Net income of Acad Express in January is a. P0 b. 2002 is a.000 d.000.000 for insurance expense. What amounts should be reported for prepaid insurance and insurance expense in Paintbrush’s financial statements for the three months ended March 31. 17. During 2002. 2002. Winword paid salaries of P872.000 45. Unpaid salaries at December 31. starting with the January 2. (b) Portion of fees collected in advance earned in January.000 balance of Salaries Expense was listed as Utilities Expense. P0 b.000 balance of Inventory was omitted.000. 2002? Prepaid Insurance Insurance Expense Prepaid Insurance Insurance Expense a.000 16. What is the correct trial balance total? a.000 P3. The balance of the salaries expense account that would appear in the post-closing trial balance at December 31.000 for prepaid insurance and P72. At March 31. P65. P180. INC. b.000. P73.000 d. the P45. Debit total was P1.000.000 On September 1. P70.000 d.000 b. The debit and credit totals of the trial balance would differ by a. P240. P439. a newly organized newspaper publisher.000.000 c.000.000 was listed in the trial balance as P39. 2003.000 15.000 c.000 c. P72. 2002. Paintbrush unadjusted trial balance showed a balance of P3. P18.000 P5. Clipper should record accrued interest payable of` a.000 In November and December 2002. trial balance of Acad Express contains revenues of P580.000 c. 21.500 d.000 Winword Co.606.000 The following errors were made in preparing a trial balance: the P135. P72. P210. P569. Clipper Corporation issued a note payable to Federal Bank in the amount of P450. P120.000.000 P2.000 credit to be made to Sales account was credited to the Accounts Receivable account instead.000 b. You are given the following closing entries of PASS NOW.000 c.000 c.000 b. Adjustments are necessary for the following items: (a) Depreciation for January.000 and expenses of P178. P77. the wages payable account balance of P93. P90.000 balance of Prepaid Insurance was listed as a credit.500 b. P135. P43.000 Paintbrush Co. a P20. 22.000 d. In determining the cause of the difference. 2002. recorded accrued salaries of P25.000 P3. 2002 amounted to P34.000.000 b. the effective date of the policy. 20. 2001.000 Before the month-end adjustments are made. P881. P225. P110. P84. P259.000 d.592. (c) Fees earned in January.612.592. the January 31. P352.000 three-year subscriptions at P240 per year. P12. you discovered the following errors: a credit to Cash of P6. At December 31. The first payment for interest and principal was made on September 1.000 The trial balance prepared at December 31.586.000 at December 31. How much should Bee report in its 2002 income statement for subscription revenue? a.000.000. P872. P16. paid P72.500 was not posted. received P720.Practical Accounting 1 Review of the Accounting Process page 3 a. 2002.000 to renew its only insurance policy for 3 years on March 1.500 d. Bee Company. P847. 18. (d) Portion of prepaid rent applicable to January. P118. not yet billed to customers.: Entry 1 Interest Revenue Accounts Payable Capital Stock Sales 4.000 d. issue of the newspaper.900 10.000 . and also reversing entries on January 1. P11.

P100.000 c.P100. Georgetown’s adjusted trial balance showed a balance of P9.440. P790. P1. 2003. Accounts receivable .P160. 25. 2003.000.900 d. P860.000 and P120.000 4.000 c.Practical Accounting 1 Review of the Accounting Process page 4 Entry 2 Income Summary Income Summary Gain on Sale of Land Cost of Goods Sold Accounts Receivable Operating Expense Other Assets 61. After posting the adjusting entries at December 31.000 c. P16. P349.P60.000 b.600 48. At December 31.P120. Land .500 12.240.000 24.000 at December 31.000.000 cost of printing catalogs for a sales promotional campaign in January 2004.200 3.000 for prepaid insurance and P441. Columbus paid the P9. P11.000 d. What amounts should be reported for prepaid insurance and insurance expense in Georgetown’s December 31.000 The account balances for Villash Corp.000.000 b. P330.000 and P110. P155.000. paid P360. 2004. the sum of the debit column is: a.000 d. P8. _P12.000. 2003 follow: Accounts payable .000 invoice on January 11.000 In a trial balance prepared on December 31. P1. Building . 2004.700 3.000 is the P15. • Radio advertisements broadcast during December 2003 were billed to Columbus on January 2.000 d. Retained earnings . 2003. P140.000 for insurance expense. before preparing the year-end adjusting entries relating to the following: • Included in the P146.’s advertising expense account had a balance of P146.900 12. Notes payable . Georgetown Co. Cash .000.000 12.900 c. P340.800 23.000 and P101.P760. 2003 financial statements? a. On November 1.500 Entry 3 Income Summary Retained Earnings The properly computed net income is a. Equipment . Columbus adjusted advertising expense for year 2003 should be a. P122. P340.000 b. Capital stock . Columbus Co.000 and P120. as of December 31.000 to renew its insurance policy for three years. 2003.P50.800 b.000.000.P280.P400.000 32.000 . 2003. P131.

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