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Fabm 1

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Learning Activity Sheets No.

1
Adjusting Entries

Practice Exercise
1. Cost ₱ 60,000
Less: Salvage Value 6,000
Depreciable Cost ₱ 54,000
Divided by: Estimated Useful Life 10
Annual Depreciation ₱ 5,400
Divide by 12
Monthly Depreciation ₱ 450

May 1, 2019 to December 31, 2021 = 32 months


Accumulated Depreciation = 450 (32)
Accumulated Depreciation = ₱ 14,000

2. Uncollected receivables = ₱ 1,300,000 x 60%


Uncollected receivables = ₱ 780,000
Doubtful Account Expense = ₱ 780,000 x 3%
Doubtful Account Expense = ₱ 23,400

3. June to December is 7 months


Five – year insurance policy
60 – 7 = 53
53
Balance for Prepaid Insurance = (150,000)
60
Balance for Prepaid Insurance = ₱ 132,500

Evaluation
1. Initial Journal Entry

12/01/19 Supplies ₱ 12,000


Cash ₱ 12,000
To record purchase of supplies

Adjusting Entry

12/31/19 Supplies Expense ₱ 9,000


Supplies ₱ 9,000
To record supplies expense

₱ 12,000 – ₱ 3,000 = ₱ 9,000

2. Initial Journal Entry

12/15/19 Utilities Expense ₱ 4,000


Cash ₱ 4,000
To record payment of subscription

Adjusting Entry
Not Applicable
- The monthly portion was already used or expired

3. Adjusting Entry

12/31/19 Accounts Receivable ₱ 63,000


Landscaping Revenue ₱ 63,000
To record accounts receivable

4. Adjusting Entry

12/31/19 Interest Receivable ₱ 6,000


Interest Income ₱ 6,000
To record interest income earned

Solution:
I = prt
3
I = ₱ 300,000 x 8% x
12
3
I = ₱ 300,000 x 0.08 x
12
I = ₱ 6,000

5. Initial Journal Entry

12/01/19 Prepaid Insurance ₱ 36,000


Cash ₱ 36,000
To record payment of insurance
for one year

Adjusting Entry

12/31/19 Insurance Expense ₱ 3,000


Prepaid Insurance ₱ 3,000
To record the expired insurance

Solution:
1
₱ 36,000 x
12
= ₱ 3,000

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