PROBLEM 1:
Prepare the adjusting entries required by the following information made available to you on
December 31, 2018, the end of the accounting period:
a. On December 31, two notes are on hand:
i. P1,500 for 60 days dated December 16, 2018 at 14% was received from a customer.
ii. P1,800, 90 days, issued to BPI on Dec. 1, 2018 discount at 18%. (Asset Method).
b. The Unexpired Insurance account balance of P23,000 represents premium paid on a two-
year insurance policy taken on December 1, 2017. The expired portion for the year 2017 has
already been adjusted.
c. The business has Accounts Receivables of P14,500 as at the end of 2018. It is estimated
that only 90% of this is collectible. Allowance for Doubtful Accounts has an adjusted balance
of P750.
d. A six-month advertising contract was entered into by the business which required an
advance payment of P2,400 on November 2, 2018 and was debited to Advertising Expense.
e. Rent income was credited for p18,000 representing three months rent received from a
lessee on October 15, 2018.
f. Office equipment costing P75,000 was purchased on October 1, 2018 and estimated to
have a useful life of five years after which it could be sold for P5,000
g. Supplies Expense has a balance of P9,500 representing supplies purchased during the
year of which only P4,500 has been taken out from the stockroom.
PROBLEM 2:
White Beach Resort has the following assets as of December 31, 2017.
Date Useful Life Cost Salvage
Acquired Value
Building January 1, 10 years P 8,000,000 P 750,000
2015
Furniture & July 1, 2016 5 years P 3,500,000 P 25,000
Fixtures
Equipment March 1, 8 years P 950,000 P 50,000
2017
REQUIRED:
a. Give the adjusting entries to record depreciation for each asset in 2015, 2016, and 2017.
b. Give the depreciation expense of each asset for each year.
c. Give the accumulated depreciation of each asset for each year.
d. Explain why there is a difference between the depreciation expense in "b" and
accumulated depreciation of each asset in "c".
e. Give the entry on March 1, 2018 when the equipment was sold for uP500,000. Hint:
Update depreciation first up to March 1, 2018 to come up with the total accumulated
depreciation.
