Adjustments: A. A collection per OR#1032 amounting to P345 was recorded as P435 in the books. But the deposit was correctly recorded. B. Prepaid Rent covered the period June 1, 2019 to May 31,2020. C. Uncollected Rent Income – P25,000.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Hereunder is the Unadjusted
Account Title Debit Credit
Cash – Treasury/Agency Deposit, Reg 100,000
Cash - MDS, Regular 180,000
Cash – TRA 70,000
Due from Officers and Employees 20,000
Office Supplies Inventory 450,000
Prepaid rent 360,000
Prepaid insurance 120,000
Building 11,000,000
Office equipment 4,000,000
Accum. Dep’n – Building 1,500,000
Accum. Dep’n – Equipment 450,000
Accounts Payable 1,500,000
Guaranteed/Deposit Payable 350,000
Accumulated Surplus/Deficit 7,640,000
Other Business Income 300,000
Rent income 200,000
Subsidy from National Government 8,000,000
Salaries and wages – Regular 2,670,000
PERA 220,000
Travelling expenses 200,000
Fuel, oil and lubricants 200,000
Electricity 350,000
------------ --------------
Total P19,940,000 P19,940,000
======== =========
Adjustments:
A. A collection per OR#1032 amounting to P345 was recorded as P435 in the books. But the deposit was correctly recorded.
B. Prepaid Rent covered the period June 1, 2019 to May 31,2020.
C. Uncollected Rent Income – P25,000.
D. An immediate investigation was conducted by the auditor to a collecting officer of DOT since the office was ransacked and resulted to loss of cash from its collection totaling P150,000. Immediately the officer reported to a nearby police station and blotter the incident. During the investigation, the collecting officer was questioned why did he not deposit his collections. The said officer requested for relief from cash accountability. But the investigation noted that there is negligence committed and left the office with his collections just put inside his unlocked drawer justifying that he always do that practice and no same incident happened. So the request was denied.
- Give the
journal entry for the amount lost upon receipt of the decision in order to establish the receivable account from the collecting officer. - The journal entries when his request was denied. It was already final and executory. He settled his accountability.
E. Transportation expenses charged to the petty cash fund in the amount of P2,000 was obligated but erroneously recorded to Fuel, oil and lublicants..
F. Liquidation of travel cash advance of P12,000 was erroneously credited to Guaranteed Deposit Payable account.
G. Remittance to BIR was erroneously recorded to Cash – Treasury/Agency Deposit, Reg amounting to P70,000.
H. Accounts Payable includes P15,000 which has been in books for over two years. This pertains to repairs and maintenance of IT equipment.
I. Total office supplies used in operation amounted to P125,000.
J. Insurance paid during the period was effective, October 1, 2019 until September 30, 2020 or for one year period.
K. A seminar fee of P20,000 was included in the cash advance for travel however, the liquidation should that the seminar fee was recorded all to travelling expenses..
REQUIREMENT:
- Prepare the
adjusting entries from letter A to K. - Prepare the closing entries
- Prepare the Statement of Operation
- Prepare the Statement of Changes in Net Assets
- Prepare the
Statement of Financial Position
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