Problem Name: U CAN DO IT GENERAL SERVICES

Answer Key and Solution Guide

1 Interest receivable 300.00

Interest income 300.00

*Interest income (P40,000 x 1/2 x 12% x 45/360)

2 Interest income before adjustment -

Credit adjustment to interest income 300.00
Interest income after adjustment 300.00

3 Doubtful accounts expense 1,400.00

Allowance for doubtful accounts 1,400.00

Accounts receivable - 12.31.2014 120,000.00

X Rate of uncollectibility 2%
Allowance for doubtful accounts - adjusted (Required) 2,400.00
Allowance for doubtful accounts - unadjusted (1,000.00)
Doubtful accounts expense 1,400.00

4 Accounts receivable - 12.31.2014 120,000.00

Allowance for doubtful accounts - adjusted (Required) (2,400.00)
Net realizable value of accounts receivable 117,600.00

5 Supplies expense 5,000.00

Supplies on hand 5,000.00

*Used portion of the prepayment (P 7,500 - P 2,500)

6 Supplies on hand - unadjusted 7,500.00

Unused portion of supplies on hand at year-end (2,500.00)
Supplies expense for the year 5,000.00

7 Depreciation expense 16,000.00

Accumulated depreciation - fur and fix 16,000.00

Furniture and fixtures at cost 60,000.00

Accumulated depreciation - Jan 01 (1,500.00)
Book value (carrying amount) of furniture and fixtures - Jan 01 58,500.00
Should be book value (carrying amount) of furniture and fixtures as at Dec 31 (42,500.00)
Depreciation expense for the year - furniture & fixtures 16,000.00

8 Accumulated depreciation - Jan 01 1,500.00

Depreciation expense for the year 16,000.00
Accumulated depreciation - Dec 31 (adjusted balance) 17,500.00

9 Depreciation expense 3,875.00

Accumulated depreciation - equipment 3,875.00
 Depreciation expense on the Sep 30 acquisition (P35,000 / 10 x 3/12) 875.00
Depreciation expense on the Jan 01 acquisition (P30,000 / 10) 3,000.00
Depreciation expense for the year - equipment 3,875.00

10 Equipment at cost 65,000.00

Accumulated depreciation - equipment, Dec 31 (Adjusted) (3,875.00)
Equipment at carrying amount (book value) - Dec 31 61,125.00

11 Interest expense 200.00

Interest payable 200.00

*Accrued interest (P40,000 x 25% x 12% 60/360)

12 Interest expense before adjustment -

Debit adjustment to interest expense 200.00
Interest expense after adjustment 200.00

13 Service income 10,000.00

Unearned service income 10,000.00

14 Service income - unadjusted 320,000.00

Debit adjustment to service income (unearned portion) (P 40000 x 1/4) (10,000.00)
Service income - adjusted 310,000.00

15 Salaries expense 8,700.00

Salaries payable 8,700.00

No. of employees Rate/day Days' unpaid Accrued salaries

5 400.00 3 6,000.00
3 300.00 3 2,700.00
8 8,700.00

16 Salaries expense - unadjusted 55,000.00

Debit adjustment to salaries expense 8,700.00
Salaries expense - adjusted 63,700.00

17 Advertising expense 9,000.00

Prepaid advertising 9,000.00

18 Prepaid advertising - unadjusted 15,000.00

Credit adjustment to prepaid advertising (expired portion) (P15,000 x 3/5) (9,000.00)
Prepaid advertising - adjusted 6,000.00

19 Prepaid rent 5,000.00

Rent expense 5,000.00

20 Rent expense - unadjusted 60,000.00

Credit adjustment to rent expense (unexpired/unused portion) (5,000.00)
Rent expense - adjusted 55,000.00