Adjustments

Deferrals – nabaydan December 31, 2022

Prepaid Expense – paid but not yet incurred – Prepaid Rent 60,000
asset Rent Expense 60,000
Deferred Revenue/ Unearned Revenue – January 1 to March 31 = 3 months * 20k = 60k
received but not yet earned – liability

Sept 1 = Insurance 15k/ month for 9 months

RENT (Asset Method)
Asset Method Prepaid Insurance 135,000
Cash 135,000
Initial Recognition – Asset
Prepaid Rent xxx
Cash xxx December 31
Insurance Expense 60,000
Adjusting: Prepaid Insurance 60,000
Rent Expense xxx 15,000 * 4 (nagamit na) = 60,000
Prepaid Rent xxx

Sept 1 = Insurance 15k/ month for 9 months

November 1, 2022. 5 months rent, (Expense Method)
20,000/month
Initial Entry – Asset Method Insurance Expense 135,000
Prepaid Rent 100,000 Cash 135,000
Cash 100,000

Dec 31
December 31 Prepaid Insurance 75,000
Rent Expense 40,000 Insurance Expense 75,000
Prepaid Rent 40,000 15,000 * 5 (nabilin) = 75,000
Nov1 to Dec31 = 2 months * 20k = 40,000

Expense Method
Initial Recognition - Expense
Initial Entry – Expense Method
Rent Expense 100,000
Cash 100,000
 October 1:
Cash 119,000
Unearned Rent Income 119,000

Accruals – wala pa nabaydan December 31, 2022

Accrued Revenue – earn but not yet Unearned Rent Income 51,000
collected (paid)
Rent Income
Accrued expense – incurred but not yet 51,000
paid
Pila na ang na earn = 3 months * 17k = 51,000

Liability Method
October 1, 17k/month, 7 months
November 1: Initial Recognition 3 months –
Revenue Method
10k per month
October 1:
Cash 30,000
Cash 119,000
Unearned Revenue 30,000
Rent Income 119,000

December 31
December 31, 2022
Unearned Revenue 20,000
Rent Income 68,000
Revenue 20,000
Unearned Rent Income 68,000
Pila na ang na earn – 2 months * 10k = 20,000
Pila ang wala pa na earn = 4 months * 17k =
68,000
Revenue Method
November 1: Initial Recognition 3 months –
10k per month
Cash 30,000
PPE – depreciation = (Carrying Amount –
Revenue 30,000
Salvage value) / Years
Equipment 100,000, salvage value of 10k, 10
December 31, 2022 years = (100,000-10,000)10 = 9,000/ year
Revenue 10,000 Initial Recognition: January 1, 2022
Unearned Revenue 10,000 Equipment 100,000
Pila pa ang wala na earn = 1 month * 10k = Cash 100,000
10,000
October 1, 17k/month, 7 months
December 31, 2022
Liability Method
Depreciation Expense 9,000
 Accumulated Depreciation 9,000
Carrying amount of the equipment at Dec 31,
2022 = 91,000

December 31, 2023

Depreciation Expense 9,000
Accumulated Depreciation 9,000

December 31, 2024

Depreciation Expense 9,000
Accumulated Depreciation 9,000

January 1 2022 = 100,000

Dep Exp on Dec 31, 2022 = 9,000 = temporary

– wala ga carry over
Accumulated Depre Dec 31, 2022 = 9k –
permanent – ga carry over Doubtful Accounts
Carrying Value Dec 31, 2022 = 91k Allowance for Doubtful Accounts – Contra
Accounts Receivable
Doubtful Accounts Expense – Expense
Dep exp Dec 31, 2023 = 9,000
Total Accum Depr Dec 31, 2023 = 18,000
AR = 100,000, 1%
Carrying Value Dec 31, 2023 = 82,000

Doubtful Acc Exp 1,000 (100,000 * 1%)

Dep Exp on Dec 2024 – 9k
– Expense is dr
Total Accum Dep Dec 2024 = 27,00
ADA 1,000 – CA of
Carrying Value 2024 = 73k Receivable – contra is credit normal balance

June 1 = 9000 (7/12) = 5250 dep 2022 june 1 – AR = 115,000, 3%, CREDIT balance of 1,000
dec 31 = 3450 total
Depreciation 2023 = 9000 = Jan1 to dec 31
Dep 2024 – 9k DAE 2450 (115,000 * 3%) – 1,000 = 2450
Accum Dep 2022 – 5250 ADA 2450
Accum Dep 2023 - 14250
Net Realizable Value of AR = 111,550 =
(115,000 – (115,000*3%))