Topics: Accounts receivable, Generally Accepted Accounting Principles, 1971 Pages: 3 (584 words) Published: February 7, 2013
Funacco Exercises – Adjusting Entries

Problem 1

Prepare the adjusting entries required by the following information made available to you on December 31, 2003, the end of the accounting period:

a. Two notes are on hand:
P1,500 for 60 days dated December 126, 2003 at 14% was received from a customer. P1,800, 90 days issued to BPI on Dec 1 interest rate 8%

b. The Unexpired Insurance account balance of P24,600 represents premium paid on a two year insurance policy taken on December 1, 2002. The expired portion for the year 2002 has already been adjusted. c. The business has Accounts Receivable of P14,500 as at the end of the year. It is estimated that only 95% of this is collectible. d. A six month advertising contract was entered into by the business which required an advance payment of P24,000 on November 2 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, 2003. f. Office equipment costing P75,000 was purchased on October 1 of the current year 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 P4,500 has been taken out from the stockroom.

Problem 2

The unadjusted trial balance of Lakbay Tours as of December 31, 2003 is shown below:

Lakbay Tours
Unadjusted Trial Balance
December 31, 2003
Accounts Receivable 25,000
Notes Receivable 16,000
Office Supplies 3,700
Prepaid Rent 93,000
Office Equipment112,000
Accumulated Depn – Office Equipment20,000
Accounts Payable55,000
Advances from Clients40,000
Solomon, Capital 194,500

Solomon, Withdrawals9,600
Tours Revenue616,800...
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