\fH+illl Gilll 0.7K/s @ . .. 10:21 AM 30 H+1 19% Review of the Accounting Process 79 E3-2 Temporary or Permanent Accounts, Indicate with an X in the appropriate column whether each listed account is a temporary of permanent account. Temporary Permanent Sales revenue Cash Cost of goods sold Prepaid rent Accumulated depreciation Cash dividends declared Retained earnings Income summary Cumulative effect, accounting change Unearned service fees Accounts payable Purchases Fire loss E3-3. Steps in the Accounting Processing Cycle. Number the following steps in the accounting information processing cycle to indicate their normal sequence of completion; Journalize and post reversing entries. Post. Identify transaction to be recorded. Journalize and post adjusting entries. Journalize and post closing entries. Prepare financial statements. Journalize current transactions. Prepare post-closing trial balance. Prepare adjusted trial balance. Prepare unadjusted trial balance.H+llll Gilll 0.9K/s ... 10:21 AM 30 H+1 19% 80 Chapter 3 E3-4 Computation of Rent Expense. Based on the following data. compute the amount of rent expense that should be reported in year 5 income statement, Show computations Balance at Dec. 31 Dec. 31. Year Year S Prepaid rent expense P15 P12 Rent payable 5 Rent paid in cash during year S - P300 (debited to rent expense) Year 5 rent expense is: P Computation: E3-5 Computation of Rear Revenue. Given the following data: rent collected for year 2. P12,000; unearned rent revenue at the end of year 1. P400: unearned rent revenue at end of year 2. P600: prepaid rent expense at the end of year 1. P600; and prepaid rent expense at end of year 2, P800. The income statement for year 2 should report rent revenue of P E3-6. Journal Entry. A company sold 15.000 shares of its ordinary equity shares. par P6, for PII cash per share. Give the entry that should be made to record this transaction. E3-7. Adjusting Entry On December 31, year 4, a company reported supplies inventory of PI,200. During year 5. supplies purchased amounted to P3,400; the purchases were debited to supplies expense The year 5 statement of financial position reported supplies inventory of P960. The amount needed for the year 5 adjusting entry for supplies was P Computation of Accrued Wages. For year S, the income statement reported wage expense of P12,000. Wages paid during the year amounted to P9.500, and accrued wages at January 1, year S amounted to P400. The amount increased in accrued wages during year 5 was PH+llll Gilll 0.1K/s @ . .. 10:22 AM 30 H+1 19% W Review of the Accounting Process 81 E39 Effect of an Error on Retained Earnings for Multiple Years. On January 2, year 4. a company paid a Pi.200. three-year insurance premium on company property and debited insurance expense. but made no further journal entry regarding the tramaction. The error was never discovered, Ignoring taxes, briefly discuss the effect of the error on the retained earnings balance at December 31, year 4, 5. 6. and 7. E3-10 Adjusting Entryflex), On May 1, year S, a company borrowed P12,000 cash and signed a 13 percent note payable due April 30. year 7, Interest is paid each April 30. The accounting period ends December 31. Give any required adjusting entry (ies) for year 5. E3-11. Adjusting Entry. On August 1, a company loaned its president P4,000 cash on a one-year. interest-free note. The going rate of interest was 12 percent. The accounting year ends on December 31. Give the necessary adjusting entry.H+illl Gilll 0.1K/s @ ... 10:22 AM 30 H+1 19% 82 Chapter 3 E3-12 Adjusting Entry. At the end of the current, P1 17,000 of wage expense was reported in the income statement. The previous year's statement of financial position reported P9.000 of wages payable. An analysis of the payroll records showed wage payments during the year of P108,000. Assuming the previous year's adjusting entry for unpaid wages was reversed on January 1 of the current year, the adjusting entry made at the end of the current year wast E3-13. Adjusting Entry. On November 1, a company collected rent in advance for the next six months and made the following entry: Cash 4.200 Rent revenue 4.200 Give the appropriate adjusting entry on December 31, the end of the accounting year. E3-14. Journal Entry. A company borrowed P20.000 cash on a two-year, 12 percent interest-bearing note, interest payable at maturity. Give the entry to record the borrowing transaction. D