Republic of the Philippines

University of Cabuyao
(Pamantasan ng Cabuyao)
College of Business, Accountancy and Administration
Katapatan Mutual Homes, Brgy. Banay-banay, City of Cabuyao, Laguna, Phillippines 4025

Financial Accounting and Reporting, Part 1

S.Y. 2023-2024, 1st Semester

PRACTICE QUESTIONS 3

Problem I

Prepare the adjusting entry for each of the following situations. The last day of the accounting
period is December 31.

a. The payment of the P19,000 insurance premium for two years in advance was originally
recorded as Prepaid Insurance. One year of the policy has now expired.
b. All employees earn a total of P10,000 per day for a five-day week beginning on Monday
and ending Friday. They were paid for the workweek ending December 26. They worked
on Monday, December 29, Tuesday, December 30, and Wednesday, December 31.
c. The supplies account had a balance of P4,480 on January 1. During the year, P11,000
of supplies were bought. A year-end inventory showed that P6,400 worth of supplies are
still on hand.
d. Equipment costing P588,000 has a useful life of five years with an P80,000 salvage
value at the end of five years. Record the depreciation for the year.

Problem II

Using T accounts, record the adjusting entries for each of the situations listed below.
The last day of the accounting period is December 31.

a. Three-days’ salaries are unpaid as at December 31. Salaries are P75,000 for a five-day
work week.
b. On August 1, a P18,000 premium was paid on a one-year insurance policy. The amount
of the premium was debited to Prepaid Insurance.
c. Before adjustments, the supplies accounts has a balance of P35,400. The count of
supplies on hand amounted to Php22,300.
d. Office equipment was purchased on March 3 for Php270,000. The expected life of the
equipment is eight years.
 Republic of the Philippines
University of Cabuyao
(Pamantasan ng Cabuyao)
College of Business, Accountancy and Administration
Katapatan Mutual Homes, Brgy. Banay-banay, City of Cabuyao, Laguna, Phillippines 4025

Problem III

Prepare the adjusting entry for Christine Gamba Cargo under each of the following for
the year ending December 31, 2023:

a. Paid P24,000 for a 1-year fire insurance policy to commence on September 1. The
amount of premium was debited to Prepaid Insurance.
b. Borrowed P100,000 by issuing a 1-year note with 7% annual interest to Century Savings
Bank on October 1, 2023.
c. Paid P160,000 cash to purchase a delivery van (surplus) on January 1. The van was
expected to have a 3-year life and a P10,000 salvage value. Depreciation is computed
on a straight-line basis.
d. Received an P18,000 cash advance for contract to provide services in the future. The
contract required a 1-year commitment, starting April 1.
e. Purchased P6,400 of supplies on account. At year’s-end, P750 of supplies remained on
hand.
f. Invested P90,000 cash in a certificate of deposit that paid 4% annual interest. The
certificate was acquired on May 1 and carried a 1-year term to maturity.
g. Paid P78,000 cash in advance on September 1 for a 1-year lease on office space.

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