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Adjusting the Accounts | 4-49 ise the following information to answer questions 7 to 11 below. The trial balance for patrocinio Abad Claims Adjuster appears as follows: ense? Patrocinio Abad Claims Adjuster Trial Balance Dec. 31. 2019 Cash Accounts Receivable P 20,000 Prepaid Insurance 50,000 use Supplies 5,000 Office Equipment 15,000 Accumulated Depreciation- 40,000 Office Equipment Accounts Payable P 20,000 Abad, Capital 30,000 Service Revenues 60,000 Salaries Expense 50,000 10,000 Rent Expense 20,000 P160,000 P160,000 7. If on Dec. 31. 2019, supplies on hand were P2,000, the adjusting entry would contain a a. credit to Supplies Expense for P13,000. b. credit to Supplies for P2,000. debit to Supplies Expense for P13,000. debit to Supplies for P2,000. 8. If on Dec. 31. 2019, the insurance still unexpired amounted to P2,000, the adjusting entry would contain a a. credit to Prepaid Insurance for P2,000. b. credit to Prepaid Insurance for P3,000. c. debit to Insurance Expense for P2,000. d. debit to Prepaid Insurance for P3,000. 9. If the estimated depreciation for office equipment were P20,000, the adjusting entry would contain a a. credit to Accumulated Depreciation-Office Equipment for P20,000. b. credit to Depreciation Expense-Office Equipment for P20,000. c. credit to Office Equipment for P20,000. d. . debit to Accumulated Depreciation-Office Equipment for P20,000.i i \"\"\"\"\" WIN Ballada \"uw ..- 450 I Basic Financial Accounting and Reporting by Pro ' I been reco .L 10. If as of Dec. 31. 2019 the rent of P10,000 for December had no paid, the adjusting entry would include a a. credit to Accumulated Rent for P10,000. b. credit to Cash for P10,000. c. debit to Rent Expense for P10,000. d. debit to Rent Payable for P10,000. 11. if services totaling P12,500 had been performed but not yet billed, the ad} entry to record this would include a a. credit to Service Revenues for P12,500. b. credit to Service Revenues for P62,SOO. c. credit to Unearned Service Revenues for P12,500. d. debit to Service Revenues for P12,500. 12. The recording of an expense could result in 3 Mn..-\" .. ADAM 4-56 | Basic Financial Accounting and Reporting by Prof. WIN Ballada SCORE: NAME: PROFESSOR: SECTION: S Problem #3 Accrual of Royalties Elisa Diaz Technologies produces computer software that Batangas Solutions sells. Diaz receives a royalty of 15 percent of sales. Batangas Solutions pays royalties to Diaz Technologies on a semi-annual basis-on May 1 for sales made in July through December of the previous year and on November 1 for sales made in January through June of the current year. Royalty expense for Batangas Solutions and royalty income for Diaz Technologies in the amount of P600,000 were accrued on Dec. 31, 2018. Cash in the amounts of P600,000 and P1,000,000 was paid and received on May 1 and Nov. 1, 2019, respectively. Software sales during the July to December 2019 period totaled P15,000,000. Required: 1. Calculate the amount of royalty expense for Batangas Solutions and royalty income for Diaz during 2019. 2. Record the adjusting entry that each entity made on Dec. 31, 2019. 9co 31, 2013 Royalty ExpenseAdjusting the Accounts | 4-57 NAME: SECTION: SCORE: PROFESSOR: problem #4 Accrual of Interest Expense Diaz 0 Diaz rough Kristine June Uy Forwarders borrowed P600,000 from the bank on Sept. 1, 2019. The rough note carried an 8% annual rate of interest and was set to mature on Feb. 28, 2020. Interest and principal were paid in cash on the maturity date. Required: n the 1,000 1. What was the amount of interest expense paid in cash in 2019? vely. 2. What was the amount of interest expense recognized on the 2019 income statement? 3. What was the amount of total liabilities shown on the 2019 balance sheet? 4 . What was the total amount of cash that was paid to the bank on Feb. 28, 2020 for principal and interest? 5. What was the amount of interest expense shown on the 2020 income statement? Problem #5 Accrual of Interest Revenue Reynaldo San Mateo, an angel investor, decided to invest P1,200,000 excess cash in a certificate of deposit on April 1, 2018. The certificate carried an 8% annual rate of interest and a 1-year term to maturity. Interest will be withdrawn monthly (disregard tax effects ). Required: 1. What amount of income will be recognized for the year ending Dec. 31, 2018? 2. What is the effect of the adjusting entry on the accounting equation? 3. What amount of cash will be collected for interest revenue in 2018? 4. What is the amount of interest receivable as of Dec. 31, 2018? 5. What amount of cash will be collected for interest revenue in 2019? 6. What amount of interest revenue will be recognized in 2019? 7. What is the amount of interest receivable as of Dec. 31, 2019?4-58 | Basic Financial Accounting and Reporting by Prof. WIN Ballada NAM SCORE : NAME: SECT PROFESSOR: SECTION: Probl Problem #6 Adjus Adjusting Entries and Accounting Policy The following are some of the transactions made by Rosemarie Jacalan Cleaners during At t 2019: P75 Acquired cleaning supplies in the amount of P260,000. A count of for r Apr. 1 the supplies on Dec. 31, 2019 amounted to P110,000. V. Aug. 1 Received P360,000 from Cebu Manpower for cleaning janitorial but uniforms over the next 3 years. Es M Nov. 1 Paid P240,000 for annual rent. Required: 1. Assume that Jacalan records these transactions using the following accounts, record the adjusting entries on Dec. 31, 2019: Office Supplies Prepaid Rent Unearned Cleaning Revenues 2. Now, assume that Jacalan records these transactions using the following accounts, what will be the adjusting entries on Dec. 31, 2019? Office Supplies Expense Rent Expense Cleaning Revenues 3. If Jacalan were to use reversing entries, which set of entries, (1) or (2), would have to be reversed? Why?Adjusting the Accounts | 4-59 NAME: SCORE: SECTION: PROFESSOR: problem #7 Adjusting Entries and Accounting Policy At the start of the year, V. Espiritu, D. Mallari, and D. Ramos Service Firms, each had to JO P75,000 of supplies on hand. The three companies use different accounting procedures for recording supplies. t bat V. Espiritu and D. Ramos show the beginning balance in the Supplies on Hand account, but D. Mallari reflects the beginning balance in the Supplies Expense account. V. Espiritu debits the account Supplies on Hand when supplies are acquired, while D. Mallari and D. Ramos follow the policy of debiting Supplies Expense upon acquisition. Each of the three companies acquired P452,000 of supplies at various times throughout the year, and each has P96,000 of supplies on hand at year-end. Required: Prepare the adjusting entry for each entity.Adjusting the Accounts | 4-63 NAME: SECTION: SCORE: PROFESSOR: problem #11 Determining Adjustments able to Noel The trial balance for Rosalie Balhag Cleaners appears as follows: June 30, Rosalie Balhag Cleaners Trial Balance Sept. 30, 2019 reek and Cash Accounts Receivable P 117,880 Prepaid Insurance 264,940 provide Cleaning Supplies 34,000 Land 73,740 Building 180,000 chases Accumulated Depreciation-Building 1,850,000 and of Accounts Payable P. 456,000 Unearned Cleaning Revenues 204,000 Mortgage Payable 16,000 Balhag, Capital 1,100,000 Balhag, Withdrawals 565,600 Cleaning Revenues 100,000 Salaries Expense 1,576,340 1,013,300 Cleaning Equipment Rental Expense 60,000 Delivery Truck Expense olicy 43,740 Interest Expense 110,000 one Other Expenses 70,340 P3,917,940 P3,917,940 and The following information is also available: a. A review of insurance policies showed that P6,800 is unexpired at the year-end. b. An inventory of cleaning supplies showed P12,440 on hand. C. Estimated depreciation on the building for the year is P128,000. d. Accrued interest on the mortgage payable is P10,000. e. On Sept. 1, the entity signed a contract, effective immediately, with Davao City Hospital to dry clean, for a fixed monthly charge of P4,000, the uniforms used by doctors in surgery. The hospital paid for four months' service in advance. T. Salaries are paid on Saturdays. The weekly payroll is P25,200. Assume that Sept. 30 falls on a Thursday and the entity has a six-day pay week. Required: for each of the above situations, show the accounts affected, the amount of the adjustment (using a + or - to indicate an increase or decrease), and the balance of the account after the adjustment.Adjusting the Accounts | 4-67 NAME: SECTION: SCORE: PROFESSOR: problem #15 Analyzing Accounts wing The following amounts are taken from the balance sheets of Demetrio Asacta: Accrued Liabilities Dec. 31, 2019 Dec. 31, 2018 Prepaid Expenses P440,000 P375,000 140,000 185,000 During 2019, expenses related to accrued liabilities were P305,000, and expenses ear related to prepaid expenses were P210,000. Required: Compute the amount of cash payments related to prepaid expenses and accrued liabilities. Acornd sahihby Problem #16 Determining the Effects of Omissions For each of the following oversights, state whether total assets will be understated, overstated, or not affected. understate a . Failure to record revenues earned but not yet received overstake b. Failure to record expired rent C . Failure to record accrued interest in the bank overstate d Failure to record depreciation overstate e. Failure to record accrued salaries not affectif. Failure to convert unearned revenues to earned revenues4-68 | Basic Financial Accounting and Reporting by Prof. WIN Ballada SCORE: NAME: PROFESSOR: SECTION: Problem #17 Analyzing Accounts The adjusted trial balances of Clare Rosada Wedding Planner as at Dec. 31, 2020, and Nov. 30, 2020, include these amounts: Dec. 31, 2020 Nov. 30, 2020 19 0 P 21,000 P 15,000 Supplies 31,000 37,000 Salaries Payable 142,000 163,000 Unearned Service Revenues Analysis of the accounts revealed these transactions for December: Supplies purchased P 84,000 Salaries paid 846,000 Cash received in advance for service revenues 1,800,200 Required: Compute the amount of Supplies Expense, Salaries Expense, and Service Revenues to be reported on the Dec. 2020 income statement