APPLICATION Prepare the adjusting entry for each of the following for the year ended December 31, 2014. 1. Paid Trio Insurance Co. P33, 000 one year car insurance to commence August 1, 2014. The amount of premium was debited to Prepaid Insurance. 2. Borrowed P200, 000 from Metro Bank issuing a one-year note with 12% annual interest on April 30, 2014. 3. Bought P20, 000 equipment with five- year estimated life and a salvage value of P2, 000. Depreciation is computed on a straight- line basis. 4. Received P51, 000 cash advance from a customer for one year of services to be rendered starting June 30, 2014. The amount was credited to Unearned Service Income. 5. Purchased P7, 100 supplies at the beginning of the year. Supplies remaining at the end of the year amounted to P2, 900. Use the asset method 6. Accounts receivable has a balance of P130, 000. It is estimated that P5, 000 of this is uncollectible.

APPLICATION Prepare the adjusting entry for each of the following for the year ended December 31, 2014. 1. Paid Trio Insurance Co. P33, 000 one year car insurance to commence August 1, 2014. The amount of premium was debited to Prepaid Insurance. 2. Borrowed P200, 000 from Metro Bank issuing a one-year note with 12% annual interest on April 30, 2014. 3. Bought P20, 000 equipment with five- year estimated life and a salvage value of P2, 000. Depreciation is computed on a straight- line basis. 4. Received P51, 000 cash advance from a customer for one year of services to be rendered starting June 30, 2014. The amount was credited to Unearned Service Income. 5. Purchased P7, 100 supplies at the beginning of the year. Supplies remaining at the end of the year amounted to P2, 900. Use the asset method 6. Accounts receivable has a balance of P130, 000. It is estimated that P5, 000 of this is uncollectible.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 52E: Adjusting Entries Exercise 3-52 Allentown Services Inc. is preparing adjusting entries for the year...

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Adjusting Entries Kretz Corporation prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for March 2016: Kretz Corporation takes out a 90-day, 8%, $15,000 note on March 1, 2016, with interest and principal to be paid at maturity. The asset account Office Supplies on Hand has a balance of $1,280 on March 1, 2016. During March, Kretz adds $750 to the account for purchases during the period. A count of the supplies on hand at the end of March indicates a balance of $1,370. The company purchased office equipment last year for $62,600. The equipment has an estimated useful life of six years and an estimated salvage value of $5,000. The companys plant operates seven days per week with a daily payroll of $950. Wage earners are paid every Sunday. The last day of the month is Thursday, March 31. The company rented an idle warehouse to a neighboring business on February 1, 2016, at a rate of $2,500 per month. On this date, Kretz Corporation credited Rent Collected in Advance for six months rent received in advance. On March 1, 2016, Kretz Corporation credited a liability account, Customer Deposits, for $4,800. This sum represents an amount that a customer paid in advance and that Kretz will earn evenly over a four-month period. Based on its income for the month, Kretz Corporation estimates that federal income taxes for March amount to $3,900. Required For each of the preceding situations, prepare in general journal form the appropriate adjusting entry to be recorded on March 31, 2016.
Garcia Company rents out a portion of its building to Jerry Company for 1,000 per month. On August 1, Jerry paid Garcia 12,000 for 1 year of rent in advance. Prepare journal entries for Garcia to record the collection ofrent and the related year-end adjusting entry on December 31.
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