Quiz #3

Solutions to Problem Solving

Set A
1 Merchandise Inventory ₱ 45,000
Based on physical count of merchandise

Adjusting entry:
Merchandise Inventory ₱ 45,000
Income summary ₱ 45,000
adjust for ending inventory

2 Principal ₱ 20,000
Rate x 0.15
Time (30/360) x 0.08
Interest income ₱ 250

3 October 30 ₱ 14,200
October 31 15,000
Accrued Wages Expense ₱ 29,200

4 Supplies, beg ₱ 2,600

Supplies purchased 8,700
Supplies, end (2,400)
Supplies expense ₱ 8,900

5 Prepaid Advertising Expense ₱ 70,700

Rate of unexpired portion x 40% 60% used
Prepaid Advertising Expense, end ₱ 28,280

6 Unearned Rent Income ₱ 180,000

Ratio of the months earned* x 0.83 Aug to Dec
Rental Income ₱ 150,000
* or months used. x 5/6

7 Client 1 Client 2
Collection ₱ 240,000 ₱ 240,000
Months unearned x 6 x 7
Total months ÷ 12 ÷ 12
Unearned Services Revenue ₱ 120,000 ₱ 140,000
Total Unearned Services Revenue ₱ 260,000
 8 Cost ₱ 30,000
Salvage value - 3,000
Depreciable cost ₱ 27,000
Estimated life in years ÷ 5
Depreciation per year ₱ 5,400
Months used x 1/12
Depreciation Expense - October ₱ 450

9 Accumulated Depreciation - 2022 ₱ 1,800 Sept to Dec

Depreciation Expense - 2023 5,400 Annual
Accumulated Depreciation - 2023 ₱ 7,200

10 Delivery Equipment ₱ 1,500,000

Accumulated Depreciation - 261,250
Net carrying amount ₱ 1,238,750

Depreciable cost ₱ 1,425,000 95% of cost

Estimated life in years ÷ 5
Depreciation per year ₱ 285,000
Months used x 11/12
Accumulated Depreciation ₱ 261,250

11
0 to 60 days ₱ 875
61 to 120 days 1,500
Over 120 days 4,200
Allowance for doubtful accounts, end ₱ 6,575
Allowance for doubtful accounts, bal - 2,500
Doubtful accounts expense ₱ 4,075

12 Accounts Receivable ₱ 762,100

Allowance for doubtful accounts, end - 22,863 3% of AR
Net realizable value ₱ 739,237