MGT111

M.A. Perez

Problem 10
Classify the following items as:
a) Deferred expense (prepaid expense)
b) Deferred revenue (unearned revenue)
c) Accrued expense (accrued liability)
d) Accrued revenue (accrued asset)
e) Depreciation
1. A three-year premium paid on a fire insurance policy.
2. Utilities owed but not yet paid.
3. Supplies on hand.
4. Salary owed but not yet paid.
5. Interest owed but payable in the following period.
6. Subscriptions received in advance by a newspaper publisher.
7. Professional Fees received but not yet earned.
8. Professional Fees earned but not yet received.
9. Interest paid in advance from a bank loan.
10. Rent collected in advance.
11. Services rendered but uncollected.
12. Advertising paid in advance for 3 months.
13. Income collected but not yet earned.
14. Rent paid in advance.
15. Interest collected in advance by the creditor.
Problem 11 (Weygant, et al, page 122)
Greg Toohey opened a dental practice on 1 January. During the first month of operations the following transactions occurred.
1.
2.
3.
4.
5.

Performed services for patients. As at 31 January, P1,560 of such services was earned but not yet recorded.
Utility expense incurred but not paid prior to 31 January totaled P800.
Purchased dental equipment on 1 January for P80,000, paying P20,000 in cash and signing a P60,000, 3 year-note payable. The equipment
depreciates P400 per month. Interest is P500 per month.
Purchased a 1-year professional indemnity insurance policy on 1 January for P24,000.
Purchased P1,600 of dental supplies. On 31 January, determined that P800 of supplies were on hand.

Instructions:
Prepare the adjusting entries on 31 January. Account titles are Accumulated Depreciation Dental Equipment, Depreciation Expense, Service Revenue,
Account Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense and
Utilities Payable.
Problem 12
Selected account balances before adjustment for Horizon Company at December 31, 2012 are as follows:
Accounts Receivable
Supplies

4,625
1,375

Prepaid Rent

15,000

Equipment

16,250

Accumulated Depreciation

4,450

Wages Payable

Unearned Fees

3,500

Fees Earned
Wages Expense

48,975
19,700

Rent Expense

Depreciation Expense

Supplies Expense

MGT111

M.A. Perez

Data needed for year-end adjustments are as follows:

a)
b)
c)
d)
e)
f)

Unbilled fees at December 31, P1,575.

Supplies on hand at December 31, P278.
Rent expired during the year, P9,000.
Equipment was purchased on January 1, 2010 with estimated salvage value of P2,900 and 6 years useful life.
Unearned Fees at December 31, P2,700.
Wages accrued but unpaid at December 31, P438.

Required:
Journalize the adjusting entries required at December 31, 2012.
Show computations after each entry if any.
Problem 13 (Weygant, et al, page 165-166)
The adjusted trial balance columns of the worksheet for Quickest Typing are as follows.
QUICKEST TYPING
Worksheet (Partial)
For the month ended 30 April 2010
Account Titles

Adjusted Trial Balance

Dr

Cr

Cash

29,504

Accounts Receivable

15,680

Prepaid Rent
Equipment

Income Statement
Dr

9,842
11,400

Accounts Payable

11,344

V. Quickest, Capital

67,920
7,300

Service Revenue

25,180
19,680

Rent Expense

1.520

Depreciation Expense

1,342

Interest Expense

114

Interest Payable
Total

Cr

46,100

Notes Payable

Salaries Expense

Cr

4,560

Accumulated Depreciation

V. Quickest Drawings

Cr

Balance Sheet

114
125,800

125,800

Net Income or (Net Loss)

T O TAL S
Instructions:
1.
2.
3.
4.

5.

Complete the worksheet.

The owner did not make any additional investments in the business in April. Prepare an Income Statement, Statement of Changes in
Equity and a classified Statement of Financial Position.
Journalize the closing entries as at 30 April.
Post the closing entries to Profit and Loss Summary and V. Quickest, Capital. Use T- Accounts.
Prepare a post- closing trial balance as at 30 April