Prepaid insurance at Dec.

31, 2019
Roberto Orcajada Realty pays commissions to its
120,500
sales staff at the rate of 3% of net sales. Sales staff
are not paid salaries but are given monthly What was the total amount of insurance premiums
advances of P15,000. Advances are charged to paid by Maurice Sabio during 2019?
commission expense, and reconciliations against
ANSWER: P448,000
commissions are prepared quarterly. Net sales for
the year ended Mar. 31, 2019 were P15,000,000.
The unadjusted balance in the commissions
expense account on March 31, 2019 was
P400,000. March advances were paid on Apr. 3, An entity has P1,500 of supplies on hand at the
2019. end of 2018. During 2019, P2,750 of supplies were
purchased. A count of supplies on hand at the end
of 2019 found an inventory of P875. What was the
amount of supplies expense for 2019?
In its income statement for the year ended Mar. 31,
2019, what amount should Robert Orcajada report
ANSWER: P3,375
as commission expense?

ANSWER: P450,000

Edgar Detoya Law must determine the Dec. 31,

At the beginning of 2018, an entity purchased a fire
insurance policy covering a property for a period of
two years. The P5,600 cost of the policy was paid
in cash. At the end of 2018, the company will
reduce Prepaid Insurance for this policy by
ANSWER: P5,600
Under Maurice Sabio Vintage Clothing Services
accounting system, all insurance premiums paid
are debited to prepaid insurance. For interim
financial reports, Maurice Sabio makes monthly
estimated charges to insurance expenses with
credits to prepaid insurance. Additional information
for the year ended Dec. 31, 2019 is as follows:
Prepaid insurance at Dec. 31, 2018
P110,000
Charges to insurance expense during 2019
437,500
(including a year-end adjustment of P10,500)
2019 year-end accruals for advertising and rent
expenses. A P5,000 advertising bill was received
Jan. 7, 2020. It related to cost of P3,750 for
advertisements in Dec. 2019 issues and P1,250 for
advertisements in Jan. 2020 issues of the
newspaper.
A store lease, effective Dec. 16, 2018 calls for fixed
rent of P12,000 per month, payable one month
from the effective date and monthly thereafter. In
addition, rent equal to 5% of net sales over
P3,000,000 per calendar year is payable on Jan.
31 of the following year. Net sales for 2019 were
P5,500,000. In its Dec. 31, 2019 balance sheet,
Edgar Detoya should report accrued liabilities of
ANSWER: P134,750
SuySan Real Estate owns an office building and
leases the office under a variety of rental
agreements involving rent paid in advance monthly
or annually. Not all tenants make timely payments
of their rent. SuySan’s balance sheets contained
the following data:

2018
Rental Receivable
P248,000
Unearned Rentals
480,000
During 2019, SuySan received P1,600,000 from
tenants. What amount of rental revenues should
SuySan record for 2019?
ANSWER: P1,816,000
A one-year insurance policy was purchased for
2019 P20,000. Three months have passed since the
purchase.
Depreciation on buildings is at P50,000.
P192,000
The company received a P36,000 advance
payment during the year on services still to be
performed. By the end of the year, one-fourth of the
640,000 services had been performed.
The company’s Supplies account showed a
beginning debit balance of P2,000 and supplies
purchased of P8,000; P3,000 of supplies were on
hand at year-end.
The adjusting entry for the insurance policy would
include a
ANSWER: credit to Insurance Expense for
P15,000.

Office Supplies were P9,000 at the end of January

and P11,400 at the end of February. During
February, Office Supplies Expense equaled to
P3,000. How much cash was paid for office
supplies during February?
ANSWER: P5,400
Based on 2019 sales of music recorded by an artist
under a contract with Therese IndieMusic, the artist
earned P200,000 after an adjustment of P16,000
for anticipated returns. In addition, Therese paid
the artist P150,000 in 2019 as a reasonable
estimate of the amount recoverable from future
royalties to be earned by the artists.

Salaries Payable were P3,500 at the end of What amount should Therese report in its 2019
September and P2,800 at the end of October. income statement as royalty expense?
Salaries Expense for October was P18,000. How
much cash was paid for salaries during October?
ANSWER: P200,000
ANSWER: P18,700

Use the following information to answer the next 5

questions. The trial balance for Patrocinio Abad
Claims Adjuster appears as follows:
Unearned Revenues was P6,000 at the end of
February and P7,500 at the end of March. Service
Revenues was P42,000 for the month of March.
How much cash was received for services provided
during March? Patrocinio Abad Claims Adjuster

ANSWER: P43,500 Trial Balance

Dec. 31, 2019
Cash If the estimated depreciation for office equipment
P20,000 were P20,000, the adjusting entry would contain a
Accounts Receivable ANSWER: credit to Accumulated
50,000 Depreciation-Office Equipment for P20,000.

Prepaid Insurance
5,000
If as of Dec. 31, 2019 the rent of P10,000 for
Supplies
December had not been recorded or paid, the
15,000
adjusting entry would include a
Office Equipment
40,000 ANSWER: debit to Rent Expense for P10,000.
Accumulated Depreciation-
Office Equipment
P20,000 If services totaling P12,500 had been performed
but not yet billed, the adjusting entry to record this
Accounts Payable
30,000 would include a

Abad, Capital ANSWER: credit to Service Revenues for P12,500.

60,000
Service Revenues
50,000
Salaries Expense Use the following information to answer the next 5
10,000 questions below. The following information pertains
to Luz Un Machine Shop:
Rent Expense
20,000 Accrued interest on a note receivable amounted to
P1,000.
P160,000 P160,000 A one-year insurance policy was purchased for
P20,000. Three months have passed since the
purchase.
If on Dec. 31, 2019, supplies on hand were P2,000, Depreciation on buildings is at P50,000.
the adjusting entry would contain a
The company received a P36,000 advance
ANSWER: debit to Supplies Expense for P13,000 payment during the year on services still to be
performed. By the end of the year, one-fourth of the
services had been performed.
If on Dec. 31, 2019, the insurance still unexpired The company’s Supplies account showed a
amounted to P2,000, the adjusting entry would beginning debit balance of P2,000 and supplies
contain a purchased of P8,000; P3,000 of supplies were on
hand at year-end.
ANSWER: credit to Prepaid Insurance for P3,000.
The adjusting entry for Supplies would include a

ANSWER: debit to Supplies Expense for P7,000.

The adjusting entry for depreciation on buildings Use the following information to answer the next 5
would include a questions below. Villanueva Realty had the
following balance sheet accounts and balances:
ANSWER: credit to Accumulated
Accounts Payable P60,000
Depreciation-Buildings for P50,000.
Equipment P70,000

Accounts Receivable 10,000

Arlyn Villanueva, Capital ?

The adjusting entry to record the accrued interest Building ?

on the note would include a Land 70,000

Cash 30,000
ANSWER: credit to Interest Income for P1,000.

If the balance of the Villanueva, Capital account

was P210,000, what would be the balance of the
The adjusting entry to record the amount of service Building account?
revenues earned during the period would include a
ANSWERS: P90,000
ANSWER: debit to Service Revenues for P27,000.

If the balance of the Building account was

P170,000, what would be the total of liabilities and
Supplies has a P60,000 unadjusted balance on owner’s equity?
your trial balance. At year-end you count supplies
of P20,000. What adjustment will appear on your ANSWERS: P350,000
work sheet?

ANSWER: Supplies Expense 40,000; Supplies

40,000
If the balance of the Building account was
P150,000 and the equipment was sold for P70,000,
what would be the total of owner’s equity?

Profit for Jeffrey Franco’s Treasures is P250,000 ANSWERS: P270,000

for the current year. The owner withdrew P30,000
per month for personal living expenses. The
owner’s Capital account will show a net
ANSWER: decrease of P110,000.
If the balance of the Building account was
P140,000 and P30,000 of Accounts Payable were
paid in cash, what would be the balance of the
Villanueva, Capital account?

ANSWERS: P260,000

If the balance of the Building account was P80,000
and P30,000 of Accounts Payable were paid in
cash, what would be the total liabilities and owner’s
equity?
ANSWERS: P230,000
The ending balance of the accounts receivable
account was P120,000. Services billed to
customers for the period were P215,000 and
collections on account from customers were
P236,000. What was the beginning balance of
Accounts Receivable?
ACCOUNTS RECEIVABLE
BB 141,000 236,000 COLL
REV 215,000 120,000 BE
356,000 356,000
On Jan. 2019, a P140,000 check was paid for
rental expenses of fourteen months. The amount
was recorded in the rent expense account. How
much is the rent expense incurred for the year
ended Dec. 31, 2019?
Answer: 120,000
On Nov. 2018, five months of insurance amounting
to P125,000 were paid for the accounting period
from Nov. 1, 2018 to Mar. 31, 2019. The amount
was debited to the insurance expense account.
How much was the insurance expense incurred for
the year ended Dec. 31, 2018 if there was no
balance in the insurance expense account.
Answer: P50,000
For the year ended Mar. 31, 2019, a business that
offers yoga lessons received P14,000 in yoga fees,
which was recorded in the yoga fee revenue
account. The amount included P3,500 for the Apr.
2019 lesson. Assuming there are no other
transactions relating to yoga fee revenue during the
financial year, how much is the yoga fee earned for
the year ended Mar. 31, 2019?
Answer: P10,500
An amount of P235,000 was received in 2019 and
recorded in the commission income account. It was
discovered that an additional commission income
of P47,000 was not received yet as at Dec. 31,
2019. How much is the commission earned for the
year ended Dec. 31, 2019?
Answer: P282,000
The supplies account had a P2,800 debit balance
at the end of the accounting period before
adjustment for supplies used, and an inventory of
P600 worth of unused supplies was on hand.
Which of the following is the required adjusting
entry?
ANSWER: Debit Supplies Expense P2,200 and
credit Supplies P2,200
A law firm began November with office supplies of
P16,000. During the month, the firm purchased
supplies of P26,000. On November 30, supplies on
hand totaled P21,000. Supplies expenses for the
period is
ANSWER: P24,000
An entity’s weekly payroll of P5,000 is paid on
Fridays. Assume that the last day of the month falls
on Wednesday. Which of the following is the
required adjusting entry?
ANSWER: Debit Salaries Expense P3,000 and
credit Salaries Payable P3,000
A business received cash of P30,000 in advance
for revenue that will be earned later. The cash
receipt entry debited cash and credited unearned
revenues for P30,000. At the end of the period,
P11,000 is still unearned. The adjusting entry for
this situation will
ANSWER: Debit unearned revenues and credit
revenues for P19,000.
In WIN.com’s Dec. 31, 2019 balance sheet, the
balance for unearned subscription revenues should
be
ANSWER: P465,000
An analysis of Angelina Tagay Antiques unadjusted
prepaid expense account at Dec. 31, 2019
revealed the following:
An opening balance at P15,000 for Angelina Taga’s
comprehensive insurance policy. Angelina Tagay
paid an annual premium of P30,000 on July 1,
2018.
A P32,000 annual insurance premium payment
made July 1, 2019.
A P20,000 advance payment for a warehouse
leased for one year beginning Jan. 1, 2020.
In its Dec. 31, 2019 balance sheet, what amount
should Angelina Tagay report as prepaid
expenses?
ANSWER: P36,000
On Nov. 1, 2019, Alevir Pido Portraits paid P36,000
to renew its insurance policy for 3 years. On Dec.
31, 2019, Alevir Pido’s unadjusted trial balance
showed a balance of P900 for prepaid insurance
and P44,100 for insurance expenses. What
amounts should be reported for prepaid insurance
and insurance expense in Alevir Pido’s Dec. 31,
2019 financial statements?
An entity that pays employees every two weeks
has paid workers P375,000 in wages and salaries
for work completed during 2018. In addition, the
employees earned one week’s salary of P7,200 at
the end of December that will be paid as part of the
P14,400 payroll at the end of the first week of
January in 2019. How much should the company
report for salaries and wages expense for 2018?
ANSWER: P382,000