COMPREHENSIVE EXERCISE – ADJUSTING ENTRIES

GENERAL INSTRUCTIONS:
1. This exercise consists all topics discussed under the Adjusting Entries.
2. If possible, please use worksheet or excel for your answers.
3. Please be reminded of the contents of the Academic Integrity Agreement.

PROBLEM NO. 1 – CORRECTING ENTRIES.

The following errors were discovered by the Accountant of Calle Enterprises during the
review of their books of accounts before the close of the books on December 31, 2020:
Required: Reconstruct the wrong entries prepared, the correct entries that should have
been made and the correcting entries that should be prepared.
1. Cash received from a bank loan of the business in the amount of P50,000.00 was
erroneously credited to Accounts Payable instead of Notes Payable.
2. Payment of Advertising expense in the amount of P25,000.00 was erroneously
recorded at P52,000.00.
3. Collection from customer’s account was credited to Accounts Payable instead of
Accounts Receivable, P60,000.00.
4. Purchase of cleaning supplies on account in the amount of P20,000.00 was
credited to Cash instead of Accounts Payable. The amount was erroneously
recorded at P30,000.00.

PROBLEM NO. 2 – ADJUSTMENT OF INVENTORIES.

The account Supplies Inventory showed a balance of P40,000.00 as of December 31,
2019. During the year, P25,000.00 cost of supplies were purchased and at the end of
December 31, 2020 P20,000.00 were found to be on hand including the damaged
supplies worth P500.00.
a) How much is the total supplies to be considered consumed or used at the end of
2020?
b) Prepared the adjusting entry to be prepared at the year end.
 PROBLEM NO. 3 – PROVISION OF ESTIMATED UNCOLLECTIBLE ACCOUNTS.
The Aging of Accounts Receivable of COVID Marketing as of December 31, 2020
revealed the following:
AGE 1 – 60 DAYS 61 – 120 DAYS
Collectible Rate * 99% 95%
J. Amo Enterprises P 25,000.00 P 5,000.00
Ela Trading 20,000.00 10,000.00
Manoy Merchandising 10,000.00 10,000.00
Lola Shop - 1,500.00

* - The percentage that the Company is expected to collect from customers. (Thus,
the difference from 100% will be the possible amount that cannot be collected.)

a) How much is the Estimated Uncollectible Account as per aging made?

b) What is the adjusting entry to record the Estimated Uncollectible Account as of
December 31, 2020?
c) What will be the entry if we will write-off the account of Lola Shop?
d) What will be the entry if Ms. Lola will pay her account which was previously
written-off?

PROBLEM NO. 4 – PROVISION OF THE ACCUMULATED DEPRECIATION.

The listing of the Property and Equipment of Misis Laundry Shop shows the following:
PROPERTY & DATE COST OF SALVAGE EST. USEFUL
EQUIPMENT ACQUIRED ASSET VALUE LIFE
Washing Machine 06/01/2019 P150,000.00 P 2,000.00 5 years
Heavy Duty Dryer 08/01/2019 110,500.00 1,000.00 5 years
Electric Iron 10/01/2020 12,000.00 -0- 3 years
Industrial Fan 12/01/2020 7,250.00 200.00 3 years

a) Compute the annual and monthly depreciation for each of the items above.
(NOTE: Please round off to whole number.)
b) What will be the net book value of each of the items as of December 31, 2020?
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