Professional Documents
Culture Documents
Prepayments
Prepayments
▰ ASSET METHOD
Journal entry upon payment:
▰ ASSET METHOD
Adjusting Entry at the end of the accounting
period:
Expense xxx
Prepaid Expense xxx
▰ Example:
On April 30, 2016, ABC Co. paid P36,000
insurance premium for 2 years. Give the
adjusting entry for June 30, 2016
Prepayments
▰ Example:
On April 30, 2016, ABC Co. paid P36,000
insurance premium for 2 years. Give the
adjusting entry for June 30, 2016
Prepayments
▰ LIABILITY METHOD
Journal entry receipt of cash:
Cash xxx
Unearned Income xxx
Deferrals
▰ LIABILITY METHOD
Adjusting Entry at the end of the accounting
period:
▰ Example:
On August 1, Dr. Yee received P90,000 for
dental fees to be rendered in the next 6
months. Give the adjusting entry at the end
of September.
Deferrals
Cash 90,000
Unearned Dental Fees 90,000
▰ Example:
On August 1, Dr. Yee received P90,000 for
dental fees to be rendered in the next 6
months. Give the adjusting entry at the end
of September.
Deferrals
Cash 90,000
Dental Fees 90,000
Expenses xxx
Expenses Payable xxx
Accrued Expenses
▰ Example:
The company received a Cepalco bill in the
amount of P9,800 on December 26, 2016.
The company intends to pay on January 8,
2017.
Accrued Expenses
▰ Example:
Unpaid salaries at the end of December 31,
2016 amounted to P18,800.
Accrued Expenses
▰ Example:
A 1-year, 6% note receivable in the amount
of P200,000 was received on January 1,
2016. The interest and the principal are
payable on maturity date. Give the
adjusting journal entry on June 30, 2016.
Accrued Income
▰ Example:
Accounts receivable shows a balance of P100,000.
It is estimated that 8% of this is uncollectible. Give
the adjusting entry on December 31, 2016 for the
provision of the estimated uncollectible accounts.
Bad Debts
▰ Example:
A building with an estimated useful life of 30 years
finished construction on June 1, 2016. The cost of
the building is P4.8 million with an estimated
salvage value of P300,000.
Give the adjusting entry for December 31, 2016 to
record the depreciation of the building.
Depreciation Expense
Computation:
Cost P 4,800,000
Less: Salvage Value 300,000
Depreciable Cost 4,500,000
Divided by: Estimated Useful life 30 years
Annual depreciation P 150,000
𝑃150,000
× 7 𝑚𝑜𝑛𝑡ℎ𝑠 = 𝑃87,500
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Depreciation Expense