Polytechnic University of the Philippines

COLLEGE OF BUSINESS ADMINISTRATION

Bachelor of Science in Business Administration
Major in Human Resource Management

Name: Kathleen S. Malinao Student Number: 2021-10237-MN-0

Yr. & Section: BSBAHRM 2-3D Teacher: Prof. Peñaflor, Francia P.
ACCO 05BC: FUNDAMENTALS OF ACCOUNTING 1
Final Assignment #2

PROBLEM 4-1. Prepare the necessary adjusting entries on December 31, 2020.
DOMINIC DE MESA MERCHANDISING follows the policy of recording
prepayments in REVENUE and EXPENSE accounts and reverses appropriate adjusting
entries at the beginning of the new accounting period. The records of the business show
the following:
A. On Sept. 1, 2020, De Mesa borrowed P 200,000 cash from PNB by issuing a 14%
notes payable due in one year. The interest is payable upon maturity of the note.
B. De Mesa purchased a three-year insurance policy for P 90,000 on July 31, 2020.
C. On September 1, 2020, De Mesa paid P 60,000 representing rental for twelve
months beginning on this date.
D. Office supplies on hand on March 1, 2020, amounted to P 900. During the year,
office supplies of P 2,200 were purchased. On December 31, there are unused
supplies of P 1,800.
E. De Mesa pays all employees every Friday. The total payroll for a five-day
workweek ending on January 2, 2021 is P40,000.
F. De Mesa purchased an office equipment on Sept 1, 2020, for P45,000. On January
1, 2020, the office equipment has a balance of P20, 000. All assets of the company
have estimated useful life of 10 years with no salvage value.
G. Dominic reports accounts receivable of P 400,000 and Allowance for doubtful
accounts of P 1,000 (debit balance); 3% of the receivables are estimated to be
uncollectible
 Polytechnic University of the Philippines
COLLEGE OF BUSINESS ADMINISTRATION
Bachelor of Science in Business Administration
Major in Human Resource Management

DATE DESCRIPTION P/R DEBIT CREDIT

2020 A Interest Expense 9,333.33
Dec-31 Interest Payable 9,333.33
(200,000 x 0.14 x 4/12) = 9,333.33

Dec-31 B Insurance Expense 12,500

Prepaid Insurance 12,500
(90,000/36 x 5) = 12,500

Dec-31 C Rent Expense 20,000

Prepaid Rent 20,000
(60,000/12 x 4) = 20,000

Dec-31 D Office Supplies Expense 1,300

Office Supplies 1,300
(2,200+900-1,800) = 1,300

Dec-31 E Salaries Expense 24,000

Salaries Payable 24,000
(40,000/5 x 3) = 24,000

Dec-31 F Depreciation Expense 1,500

Accumulated Depreciation 1,500
(45,000/10 x 4/12) = 1,500

Dec-31 G Doubtful Accounts Expense 12,000

Allowance for Doubtful Accounts 12,000
(400,000 x 0.03) = 12,000

Accounts Receivable 1,000

Allowance for Doubtful Accounts 1,000
To normalize the balance of
doubtful accounts.
 Polytechnic University of the Philippines
COLLEGE OF BUSINESS ADMINISTRATION
Bachelor of Science in Business Administration
Major in Human Resource Management

PROBLEM 4-2. Preparation of Adjusting Entries

INSTRUCTIONS:
1. Prepare adjusting entries on December 31, 2020 on the following transaction
2. Show computation as your explanation.

The following information has been made available in connection with the closing of
the books of Minda Enterprises as of December 31 are as follows:
A. Salaries already due but not yet paid as of December 31, amounted to P 9,500.
B. The rent income has a balance of P 6,800. Of this amount, P 1,500 has already
been earned as of December 31.
C. The insurance expense account amounted to P 6,000. Of this amount, P 2,000
expired as of December 31.
D. The Subscription Income has a balance of P 9,800. Of this amount P 5,000 has
already been earned as of December 31.
E. Interest earned but not yet collected on notes receivable outstanding, p 2,400.
F. Interest due on notes payable outstanding, P 4,600.
G. Interest paid in advance on a bank loan was debited to interest expense account,
P980. The loan will run for a period of 90-day starting from December 1.
H. Interest collected and credited to interest income P 1,400. This represents interest
for a 45-day period effective December 18.
I. Store supplies debited to Store supplies expense, P 6,600. As of December 31, P
2,250 store supplies are still unused.
J. Accounts receivable of P250,000 is only 94% is collectible.
K. Building of P300,000 have an estimated useful life of 20 years with scrap value of
P50,000 and was acquired on Jan 1.

DATE DESCRIPTION P/R DEBIT CREDIT

2020 A Salaries Expense 9,500
Dec-31 Salaries Payable 9,500
Accrued salaries expense to
employees.

Dec-31 B Rent Revenue 1,500

Unearned Rent Revenue 5,300
(6,800-1,500) = 5,300
 Polytechnic University of the Philippines
COLLEGE OF BUSINESS ADMINISTRATION
Bachelor of Science in Business Administration
Major in Human Resource Management

Dec-31 C Prepaid Insurance 4,000

Insurance Expense 4,000
(6,000-2,000) = 4,000

Dec-31 D Subscription Revenue 5,000

Unearned Subscription Revenue 4,800
(9,800-5,000) = 4,800

Dec-31 E Interest Receivable 2,400

Interest Revenue 2,400

Dec-31 F Interest Expense 4,600

Interest Payable 4,600

Dec-31 G Interest Payable 326.67

Interest Expense 326.67
(980/90 x 30) = 326.67

Dec-31 H Interest Revenue 404.44

Unearned Interest Revenue 404.44
(1,400/45 x 13) = 404.44

Dec-31 I Store Supplies 4,350

Store Supplies Expense 4,350
(6,600-2,250) = 4,350

Dec-31 J Doubtful Accounts Expense 15,000

Allowance for Doubtful Accounts 15,000
(250,000 x 0.06) = 15,000

Dec-31 K Depreciation Expense 12,500

Accumulated Depreciation 12,500
(300,000-50,000/20) = 12,500