Activity 4 - Basic Accounting

NATIONAL UNIVERSITY
College of Business and Accountancy

BASACC1 - FUNDAMENTALS OF ACCOUNTING
SET: A
Name: Section: Date:
ACTIVITY 4: ADJUSTING ENTRIES
Other
1. Protonix Corp has a payroll of P6,000 for a five-day workweek. Its employees are paid each Friday for the five-day
workweek. The adjusting entry on December 31, 2011 assuming the year ends on Thursday would be:
Date Description Post Ref Debit Credit
2. A one-year insurance policy was purchased on June 1, 2011 for P1,500. The adjusting entry on December 31, 2011 would
be:
3. Depreciation on Office Equipment is P3,300. The adjusting entry on December 31, 2011 would be:
4. A one-year insurance policy was purchased on October 1, 2011 for P4,200. The adjusting entry on December 31, 2010
would be:
5. The Supplies account had a beginning balance of P1,750. Supplies purchased during the period totaled P3,500. At the
end of the period before adjustment, P350 of supplies were on hand. Prepare the adjusting entry for supplies.
6. On January 1, DogMart Company purchased a two-year liability insurance policy for P22,800 cash. The purchase was
recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.
7. DogMart Company records depreciation to Office Equipment and Production Equipment. Depreciation for the period
ending December 31 is P1,400 for Office Equipment and P2,650 for Production Equipment. Prepare two entries to record
the Office Equipment and Production Equipment depreciation.
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Name: ________________________ ID: A
8. On January 1, the Newman Company estimated its property tax to be P5,100 for the year.
(a) How much should the company accrue each month for property taxes?
(b) Calculate the balance in the Property Tax Payable account as of August 31.
(c) Prepare the adjusting journal entry for the month of September.
9. On January 1st, Power House Co. prepays the year’s rent, P10,140 to its landlord. Prepare the journal entry by recording
the prepayment to an asset account.
10. Requirement: Make the journal entries for both of the following:
(a) On December 1, P12,500 was received for a service contract to be performed from December 1 through until April
30.
(b) If the service work for this contract is performed evenly and on a regular basis throughout this period, prepare the
adjusting journal entry as of year-end, December 31.
11. On December 31, the balance in the Office Supplies account is P1,385. A count shows P435 worth of supplies on hand.
Prepare the adjusting entry for supplies.
12. Depreciation on equipment for the year is P900.

(a) Record the journal entry if the company adjusts its account once a year.
(b) Record the journal entry if the company adjusts its account on a monthly basis.
13. The company determines that the interest expense on a note payable for period ending December 31st is P775. This
amount is payable on January 1st. Prepare the journal entries required on December 31st and January 1st.
14. On January 2nd, Dog Mart prepaid P15,000 rent for the year and recorded the prepayment in an asset account. Prepare
the January 31st adjusting entry for rent expense.
15. The balance in the unearned fees account, before adjustment at the end of the year, is P10,250. Journalize the
adjusting entry required if the amount of unearned fees at the end of the year is P3,125.
Problem
1. For each of the following, journalize the necessary adjusting entry:
(a) A business pays weekly salaries of P22,000 on Friday for a five-day week ending on that day.
Journalize the necessary adjusting entry at the end of the fiscal period, assuming that the
fiscal period ends (1) on Tuesday, (2) on Wednesday.
(b) The balance in the prepaid insurance account before adjustment at the end of the year is
P18,000. Journalize the adjusting entry required under each of the following alternatives: (1)
the amount of insurance expired during the year is P5,300, (2) the amount of unexpired
insurance applicable to a future period is P2,700.
(c) On July 1 of the current year, a business pays P54,000 to the city for license taxes for the
coming fiscal year. The same business is also required to pay an annual property tax at the
end of the year. The estimated amount of the current year's property tax allocable to July is
P4,800. (1) Journalize the two adjusting entries required to bring the accounts affected by
the taxes up to date as of July 31. (2) What is the amount of tax expense for July?
(d) The estimated depreciation on equipment for the year is P32,000.
2
Name: ________________________ ID: A
2. Encore Consulting is completing the accounting information processing at the end of the fiscal year, December 31, 2011.
The following trial balances are available.
Accounts Unadjusted Trial Balance Adjusted Trial Balance

Debits Credits Debits Credits
Cash 13,000 13,000
Accounts Receivable 1,500 1,800
Prepaid Insurance 600 200
Supplies 3,800 3,000
Machines 30,000 30,000
Accumulated 12,000 17,500
Depreciation - Machines
Wages Payable 900
Unearned Revenue 6,700 6,500
John Brown, Capital 24,000 24,000
John Brown, Drawing 4,800 4,800
Service Revenue 25,000 25,500
Wages Expense 14,000 14,900
Insurance Expense 400
Supplies Expense 800
Depreciation Expenses 5,500
67,700 67,700 74,400 74,400
A. Reconstruct the adjusting entries and give a brief explanation of each.

B. What is the amount of net income?
3. On March 1, a business paid P3,600 for a twelve month liability insurance policy. On April 1 the same business entered
into a two-year rental contract for equipment at a total cost of P18,000. Determine the following amounts:
(a) insurance expense for the month of March
(b) prepaid insurance as of March 31
(c) equipment rent expense for the month of April
(d) prepaid equipment rental as of April 30

Activity 4 - Basic Accounting

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NATIONAL UNIVERSITY

College of Business and Accountancy

Name: Section: Date:

ACTIVITY 4: ADJUSTING ENTRIES

Date Description Post Ref Debit Credit

Date Description Post Ref Debit Credit

12. Depreciation on equipment for the year is P900.

1. For each of the following, journalize the necessary adjusting entry:

Accounts Unadjusted Trial Balance Adjusted Trial Balance

A. Reconstruct the adjusting entries and give a brief explanation of each.

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