\

Adjusting Journal Entry at end of the accounting period December 31, 2016
Rent Expense
Prepaid Rent
To record expired rent
10.000
10,000

Computation
The $30,000 amount of rent represents one-year or 12-month rent. Divide P 30,00, by 12 to
get the monthly rent. Then, multiply it by 4 months representing the rent from September 1 to
December 31, 2016.
P30,000/12× 4 = P10,000

P 10.000 is therefore the expired/ used rent from September 30 to December 31, 2016
Analysis: When you paid $30,000 for the one-year rent in advance on September 1, you
debited the asset account Prepaid Rent representing 12 months rent. On December 31, the
end of the accounting period, the P30,000 Prepaid Rent is not totally asset since it includes
the 4 months used portion (Sept. 1 to December 31). Hence, an adjusting entry is necessary
to recognize the rent expense for 4 months by debiting it and decreasing the balance of
Prepaid Rent by crediting it.

Example 3
Supplies account showed a balance of P 4,000. Supplies used during the year amounted to
P2,300. Give the Adjusting Journal Entry on Dec. 31, 2016.

Adjusting Journal entry on Dec. 31, 2016

Supplies Expense
Supplies
To record supplies used for the year
2,300
2,300

Computation
was already given in the problem.
There is no computation necessary because the P2,300 supplies used during the year
Analysis: The asset account Supplies showed a balance of P4,000 at the beginning of the
year. Supplies used during the year amounted to P2,300. This should be recorded as
expense by debiting Supplies Expense and crediting the asset account Supplies to
decrease its balance.

Example 4
Supplies account on January 1, 2016, showed a balance of P 8.000. On December 31,
2016, supplies on hand amounted to P3,500.
Adjusting Journal Entry on December 31, 2016