Name:_______________________________________ Date:________________________________

Teacher:_____________________________________ Score:_________ Rate:________________

ADJUSTING JOURNAL ENTRY

ACTIVITY QUIZ

Directions: Creative Events closes its books every December 31 and correspondingly prepare
year-end adjusting journal entries. Make the appropriate adjusting entry for each of the
following items.

1. Last September the company paid one year insurance to Phil-Am Insurance Company for the building in the
amount of 25,200. The assets method was used to record the insurance payment.
Date Account title Debit Credit
Insurance Expense 8,400
Prepaid Insurance 8,400

2. On February 28, the company lent Flora and Fauna Co. 80,000 at 12% interest per annum. Interest will be paid
upon maturity of the debt.
Date Account title Debit Credit
Interest Expense 8,000
Interest Payable 8,000

3. Five workers are paid every Saturday for a six day work at 404 a day. December 31 falls on Wednesday.
Date Account title Debit Credit
Salaries Expense 2,424
Salaries Payable 2,424

4. Last October 31, the company sign Sexiest Advertising for a two year advertising campaign, with the aim to
promote its services for the next two years. In line with this, the company paid
1,800,000 for the contract and the assets method was used to record the payment.
Date Account title Debit Credit
Prepaid Advertising
Advertising Expense

5. On January 31, the company leased an office space in Ortigas. It received 264,000 for annual rent and credited the
amount to unearned rent.

Date Account title Debit Credit

Prepaid Advertising 242,000
Advertising Expense 242,000

6. Supplies purchased during the year amounted to 12,800 of which 25% remained on hand at the end of the year.
Date Account title Debit Credit
Supplies Expense 3,200
Supplies 3,200

7. Accounts receivable has a balance of 99,000 of which 6% is estimated to be uncollectible. The Allowance for
Doubtful Accounts has a credit balance of 2,300 before the adjustment.
Date Account title Debit Credit
Bad Debt Expense 3,640
Allowance for Bad Debts 3,640

8. Meralco bill received on December 31 in the amount of 3,888 will be paid on the tenth of January the following
year.
Date Account title Debit Credit
Utilities Expense 3,888
Utilities Expense 3,888

9. On March 15 the company borrowed 700,000 from Metro Bank 9% interest per annum. No interest has been paid
to Metro Bank.
Date Account title Debit Credit
Interest Expense 6,631.6
Interest Payable 6631.6

10. The company’s land and building cost 16,000,000. Twenty-five percent of the cot was allotted to the land and the
remaining balance was allotted to the building. The building has an estimated useful life of 25 years and salvage
value of 500,000
Date Account title Debit Credit
Depreciation Expense 460,000
Accumulated Depreciation 460,000