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Adjusting Entry Problems

This document contains three practice problems involving adjusting journal entries. Problem 1 lists 10 items and asks to identify the type of adjustment needed for each and prepare the adjusting entries. Problem 2 provides two scenarios involving prepaid insurance and unearned revenue and asks to prepare the initial and adjusting entries using different methods. Problem 3 provides accounting events for a business and asks to record the transactions and prepare any necessary adjusting entries.

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Rize Takatsuki
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132 views

Adjusting Entry Problems

This document contains three practice problems involving adjusting journal entries. Problem 1 lists 10 items and asks to identify the type of adjustment needed for each and prepare the adjusting entries. Problem 2 provides two scenarios involving prepaid insurance and unearned revenue and asks to prepare the initial and adjusting entries using different methods. Problem 3 provides accounting events for a business and asks to record the transactions and prepare any necessary adjusting entries.

Uploaded by

Rize Takatsuki
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PRACTICE QUESTIONS

PROBLEM 1
1. Unpaid salaries, P40,000.00
2. Revenue earned but not collected, P100,000.00
3. Rent paid on November 1, 2018 for six months, P60,000.00 which was debited to rent
expense.
4. Rent paid on November 30, 2018 for twelve months, P60,000.00 which was debited to
prepaid rent.
5. Received a 60-day, 10% note from customer on December 1, 2018, P50,000.00
6. The company issued a 180-day, 8% promissory note on September 1, 2018,
P90,000.00.
7. Of the P 10,000.00 office supplies purchased on June 1, 2018, only P1,600 is still on
hand. Office supplies expense is debited at the time of purchase.
8. Of the P10,000.00 office supplies purchased on June 1, 2018, only P1,600 is still on
hand. Office supplies account is debited at the time of purchase.
9. Received P200,000 on December 1, 2018 for services to be performed after 1 week.
P150,000 earned during the year. Unearned service revenue is credited on December
1.
10. Received P200,000 on December 1, 2018 for services to be performed after 1 week.
P150,000 is unearned during the year. Service revenue is credited on December 1

Required:

a. Identify the type of adjustment for each item. Write DE for Deferred Expense, DR for
Deferred Revenue, AE for Accrued Expense and AR for Accrued Revenue.
b. Prepare the necessary adjusting journal entries for December 31, 2018 on the space
provided below.

Debit Credit

1.

2.

3.

4.

5.

6.

7.

8.

9.
10
.

PROBLEM 2

1. On October 1, 2018 a two-year insurance premium amounting to P60,000 was paid in


cash. The balance sheet date is on December 31,2018.

Required: Prepare the original entry and the adjusting entry assuming the company uses:

Date Description Debit Credit

10/01/2018

12/31/2018

a. Asset Method

b. Expense Method

Date Description Debit Credit

10/01/2018

12/31/2018

Date Description Debit Credit

10/01/2018

12/31/2018

2. On November 1, 2018, the company received cash from its customers, P50,000,
representing revenue from sub-rental for a 5-month period beginning on that date. The
balance sheet date is on December 31, 2018.

Required: Prepare the original entry and the adjusting entry assuming the company uses:

a. Liability Method

Date Description Debit Credit


b. Revenue Method

Date Description Debit Credit

11/01/2018

12/31/2018

PROBLEM 3
Labalaba Laundry Services starts operation late 2017. As at December 31, 2017, the
accounting records contained the following balances:
Assets Liabilities and Equity
Cash P 18,000 Accounts Payable P 3,400
Accounts Receivable 11,000
Equipment 9,000 Labalaba, Capital 34,600
Total 38,000 Total 38,000

The following accounting events apply to 2018:

Jan. 1 Received P10,000 additional cash investments from the owner.

Purchased a service vehicle for P8,800. The vehicle has P800 salvage value
1
and a 5-year useful life.

Borrowed P10,000 by issuing a note that carried a 10% annual interest


Feb. 1
rate and a 1-year term.

1 Paid P6,000 cash in advance for a 1-year lease for office space.

Mar. 1 Performed laundry services on account, P15,000.

April 1 Received P8,000 cash for laundry services rendered.

May 1 Made a cash payment on accounts payable amounting to P1,500.

Received P4,800 cash in advance for services to be performed monthly


July 1
over the coming year.

Sept.
Received P20,000 from customers previously billed.
1

Oct. 1 Purchased P2,000 of supplies for cash.

* Supplies on hand at year end P500.


** Equipment has a useful life of 10 years with no salvage value.
*** Accrued salaries amounted to P5,000
Required: (Provide date for each entry)
1. Prepare journal entry for the above transaction on the space provided below.
2. Prepare all adjusting entries.

Date Debit Credit

Use space below for adjusting entries

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