BAACCEN

ACTIVITY WORKSHEET FOR EL STUDENTS

PROFESSOR: Alberto S. Malquisto, Jr. No. 005
Unit 6: Adjusting Entries and Adjusted Trial Balance

Name: _Mark Lovie D. De La Cruz______________________________________ SECTION CODE: __200__

Please read the required activities carefully and make sure you understand the facts before you begin
answering. Please submit your answers through CANVAS ASSIGNMENTS using MS Word or PDF.

Your file name should be similar to this example: MALQUISTO_ASSIGNMENT005

For problem I, II and III, show supporting computations.

I. A machine was acquired by the entity on June 1 at a price of P50,000. The said
machine has a salvage value of P5,000 and an estimated useful life of 10 years.

a) How much is the carrying value of the machine at year end (December 31)?
Answer: ₱47,375
Solution:
= Cost – salvage value/estimated useful life
= 50,000 – 5,000/10yrs. or 50,000 – 5,000 x 7/120
= 45,000 x 7/12
= 2,625

Entry:

Depreciation Expense 2,625

Accumulated Depreciation 2,625

Balance Sheet:

Service Vehicle ₱50,000

Less: Accumulated Depreciation 2,625
₱47,375

b) At what amount should depreciation expense be recorded for the year?

Answer: ₱2,625
Solution:
= Cost – salvage value/estimated useful life
= 50,000 – 5,000/10yrs. or 50,000 – 5,000 x 7/120
= 45,000 x 7/120
= 2,625

Entry:

Depreciation Expense 2,625

Accumulated Depreciation 2,625

Page 1 of 2
II. The company has appropriately made an adjusting entry at the end of the first year
shown below:
Prepaid insurance 30,000
Insurance expense 30,000

The insurance was paid at the beginning of the year and covers 4 years.

a) How much is the actual amount of expense or the expired portion of the insurance?
Answer: ₱10,000

Solution:
Journal entry (Expense method):
Insurance Expense 40,000
Cash 40,000

Adjustments:
Prepaid insurance 30,000
Insurance expense 30,000

Adjusted:
Prepaid Insurance 30,000
Insurance Expense 10,000

So, 40,000 – 10,000 = 10,000

b) At what amount was the transaction (payment of insurance) originally recorded?

Answer: ₱40,000

Solution:
Journal entry (Expense method):
Insurance Expense 40,000
Cash 40,000

c) When the transaction was originally recorded, what account was debited?
Answer: Insurance expense

III. SAN uses expense method of recording prepayments. At the beginning of the current year,
an advance rental of ₱36,000 was paid by SAN to the owner of the commercial
building that his business occupies. Said payment covers a 3-year rent.

a) After the necessary adjustments in the 1st year, how much is the expense portion of the
rent?
Answer: ₱12,000
Solution:
36,000/3= 12,000

Journal Entry (expense method):

Rent Expense 36,000
Cash 36,000

Adjustments:
Prepaid Rent 24,000
Rent Expense 24,000
Adjusted:
Prepaid Rent 24,000
Rent Expense 12,000

36,000-24,000 = 12,000

Page 2 of 2
IV. Analyze the following independent situations and supply the corresponding adjusting entries
for the year ending December 31, 2019

a) An insurance premium was paid in advance by the company for ₱5,000,000. The
insurance
covers 5 years and was paid on June 30, 2019. (Use Asset Method)
Answer:
Adjusting entry:
Dec. 31,2019 Insurance Expense ₱500,000
Prepaid Insurance ₱500,000

Solution:
=5,000,000 x 6/60
=500,000

b) A machine with a total cost of ₱150,000 and salvage value of ₱5,000 was acquired last
March 31, 2019. The estimated life is 10 years. Straight line method of depreciation is used.
Answer:
Adjusting entry:
Dec. 31,2019 Depreciation Expense ₱10,875
Accumulated Depreciation ₱10,875

Solution:
=Cost – salvage value/ useful life
= 150,000 – 5,000 x 9/120
= 10,875

c) Before adjustments, supplies had a balance of ₱10,000. At year-end, only ₱1,500 worth
of
supplies remained on hand. (Use Asset Method)
Answer:
Adjusting entry:
Dec. 31,2019 Supplies Expense ₱8,500
Supplies ₱8,500

d) A loan of ₱1,000,000 was obtained on April 1, 2019. Said loan bears interest of
10% annually which has not yet been paid.
Answer:
Adjusting Entry:
Dec. 31,2019 Interest Expense ₱75,000
Interest Payable ₱75,000

Solution:
1,000,000 x .10 x 9/12
=75,000

e) Armando, the owner of a commercial building received in advance an amount of

₱50,000 as rental from one of its tenants. The rental covers 5 months and was
received on September 1, 2019. (Use Liability Method)
Answer:
Adjusting Entry:
Dec. 31,2019 Unearned Income ₱40,000
Service Income ₱40,000

Page 3 of 2
Solution:
50,000 x 4/5
= 40,000

Page 4 of 2
V. You were hired as the new accountant of a small business towards the end of the calendar
year. The previous accountant turned over to you the UNADJUSTED Trial balance for the
1st year of operation. Fortunately, you were able to get useful information to guide you.

INFORMATION:

a) Unused supplies at the end of the period is ₱2,900

b) The rent was paid at the beginning of the year and covers a 3-year rent
c) Machinery was purchased at the beginning of February and has a salvage value of
₱10,000 with a useful life of 10 years. Furniture was acquired at the beginning of
the year with no residual value and has a life of 9 years.
d) The notes payable is due and demandable in two years and the loan related to it
was obtained on December 1 of the current year. It bears interest of 10% per year.
e) Salaries amounting to ₱30,000 has remained unrecorded and unpaid
f) A ₱6,000 worth of accounts receivable is doubtful of collection.

DAP GENERAL REPAIRS AND OTHER SERVICES

Unadjusted Trial Balance
December 31, 2020

PARTICULARS Debit Credit

Cash 2,050,000
Accounts Receivable 70,000
Office Supplies 7,000
Prepaid Rent 30,000
Machinery and Equipment 310,000
Furniture and Fixtures 180,000
Accounts Payable 28,000
Notes Payable 600,000
Dap, Capital 959,500
Service Revenue 1,070,000
Miscellaneous Expense 4,500
Utilities Expense 6,000

2,657,500 2,657,500

REQUIREMENTS:
a. Prepare the adjusting entries for the company on December 2020.
b. Prepare the ADJUSTED TRIAL BALANCE in good form (December 2020).

Page 5 of 2
 A.
Adjusting entries:

Dec. 31, 2020 Supplies Expense ₱4,100

Office Supplies ₱4,100
To adjust unused supplies

Dec. 31, 2020 Rent Expense ₱10,000

Prepaid Rent ₱10,000
To adjust expired portion of rent

Dec. 31, 2020 Depreciation Expense-Machinery ₱30,000

Accumulated Depreciation ₱30,000
To adjust depreciation of machinery

Dec. 31, 2020 Interest Expense ₱5,000

Interest Payable ₱5,000
To adjust interest expense in the period

Dec. 31, 2020 Salaries Expense ₱30,000

Salaries Payable ₱30,000
To adjust unpaid salary

Dec. 31, 2020 Uncollectible Accounts Expense ₱6,000

Allowance for Uncollectible Accounts ₱6,000
To adjust possible no collection of accounts receivable

B.

DAP Particulars Debit Credit GENERAL

REPAIRS Cash 2,050,000 AND OTHER
SERVICES Accounts Receivable 70,000
ADJUSTED TRIAL
Less: Allowance for uncollectible 6,000
BALANCE
accounts
December 31,2020
Office Supplies 2,900
Prepaid Rent 20,000
Machinery and Equipment 310,000
Less: Accumulated Depreciation 30,000
Furnitures and Fixtures 180,000
Accounts Payable 28,000
Noted Payable 600,000
Salaries Payable 30,000
Interest Payable 5,000
Dap, Capital 959,500
Service Revenue 1,070,000
Uncollectible Accounts Expense 6,000
Supplies Expense 4,100
Rent Expense 10,000
Depreciation Expense 30,000
Interest Expense 5,000
Salaries Expense 30,000
Miscellaneous Expense Page 6 of 2 4,500
Utility Expense 6,000
Total ₱2,728,500 ₱2,728,500