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Quizzes - Chapter 8 - Adjusting Entries - Bsac

Adjusting entries

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559 views5 pages

Quizzes - Chapter 8 - Adjusting Entries - Bsac

Adjusting entries

Uploaded by

olcenpogi5
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 8

Adjusting Entries
NAME: Manguerra, Audrick Lucian F. Date: 12/06/23
Professor: Maam. Kenneth Velasco Section: BSAC 1- Score:
2

QUIZ:
Items 1 to 6: Multiple Choice Write the letter of your BEST ANSWER in the
space before the number.
E 1.) Which of the following is incorrect regarding adjusting entries?
a. Adjusting entries involve at least one balance sheet account and one income
statement account.
b. Adjusting entries affect profit or loss.
c. In layman’s terms, “to accrue” means to accumulate, while “to defer” means to
postpone.
d. The process of splitting mixed accounts into their expired and unexpired
portions or earned and unearned portions refers to accrual.
e. Adjusting entries are typically prepared only when financial statements are
prepared.

D 2.) Which of the following is most likely not considered an adjusting


entry?
a. The accrual of an electricity bill for electricity used but not yet paid
b. The recognition of depreciation expense for the period
c. The recognition of the used and unused portions of a prepaid rent
d. The entry to record the collection of interest receivable

D 3.) Which of the following is most likely considered an adjusting entry?


a. The entry to record the payment of interest payable
b. The entry to record the collection of accounts receivable
c. The entry to record the purchase of equipment
d. The entry to record bad debts expense for the period

D 4.) The term “accrual” as used in accounting means


a. to record an income that is already earned but not yet collected.
b. to record an expense that is already incurred but not yet paid.
c. to record the collection of income or the payment of expense.
d. a and b

D 5.) The term “deferral” as used in accounting means


a. to split the earned and unearned portions of an advanced collection.
b. to split the expired and unexpired portions of a prepayment.
c. to record the collection of income or the payment of expense.
d. a and b

C 6.) These accounts are closed at the end of the accounting period.
a. Real accounts
b. Mixed accounts
c. Nominal accounts
d. Door accounts

Items 7 to 20: Journal entries

1
1. Entity A received a 10%, ₱200,000, one-year, note receivable on July 1, 20x1. Entity
A uses a calendar year period. The principal and interest on the note are due on
July 1, 20x2. What is the adjusting entry on December 31, 20x1?

Date Account titles Debit credit


12/31/20 Interest Receivable 4,000
x1
Interest Income 4,000
-to account for interest earned but not
collected

2. Entity A issued a 12%, ₱200,000, one-year, note payable on November 1, 20x1.


Entity A uses a calendar year period. The principal and interest on the note are due
on November 1, 20x2. What is the adjusting entry on December 31, 20x1?

Date Account titles Debit credit


12/31/20 Interest Expense 4,000
x1
Interest Payable 4,000
-to account for interest incurred but not
paid

3. Your business is renting a space. The monthly rental is ₱120,000. On December 31,
20x1, the rent for the months of November and December 20x1 are not yet paid.
What is the adjusting entry?

Date Account titles Debit credit


12/31/20 Rent Expense 240,000
x1
Rent Payable 240,000
-to account for rent incurred but not
paid

4. A business receives its electricity bill for the period amounting to ₱6,000. What is
the entry to record the receipt of the bill prior to its payment?

Date Account titles Debit credit


12/31/20 Utilities Expense 6,000
x1
Utilities Payable 6,000
-to account for utilities incurred but not
collected

2
5. On January 1, 20x1, your business acquires computer equipment for ₱120,000. You
expect to use the computer over the next 3 years. What is the adjusting entry on
December 31, 20x1 to take up depreciation expense?

Date Account titles Debit credit


12/31/20 Depreciation Expense 40,000
x1
Accumulated Depreciation 40,000
-to record depreciation expense

6. Your business has accounts receivable of ₱300,000. You estimated that out of that
amount, 10% is doubtful of collection. What is the adjusting entry to record the
doubtful accounts?

Date Account titles Debit credit


12/31/20 Bad Debt Expense 30,000
x1
Allowance for Bad Debts 30,000
-to record bad debts

Use the following information for the next four questions:


Your business is renting out properties. On June 1, 20x1, your business receives one-
year advanced rent of ₱360,000 from one of your tenants. The advanced rent covers
the months of June 1, 20x1 to May 31, 20x2.

7. What is the journal entry to record the collection on June 1, 20x1 under the liability
method?

Date Account titles Debit credit


06/01/20 Cash 360,000
x1
Unearned Income 360,000
-to account for 1 year rent in advance

8. What is the journal entry to record the collection on June 1, 20x1 under the income
method?

Date Account titles Debit credit


06/01/20 Cash 360,000
x1
Rent5 Income 360,000
-to account for 1 year rent in advance

9. What is the adjusting entry on December 31, 20x1 under the liability method?

Date Account titles Debit credit


12/31/20 Unearned Income 210,000
x1
Rent Income 210,000

3
-to record earned part of 1 year rent
advance

10. What is the adjusting entry on December 31, 20x1 under the income method?

Date Account titles Debit credit


12/31/20 Rent Income 150,000
x1
Unearned Income 150,000
-to record unearned part of 1 year rent
advance

Use the following information for the next four questions:


Your business pays one-year insurance of ₱360,000 on November 1, 20x1.

11. What is the journal entry to record the prepayment on November 1, 20x1 under the
asset method?

Date Account titles Debit credit


11/01/20 Prepaid Insurance 360,000
x1
Cash 360,000
-to record pre-payment of 1 year
insurance

12. What is the journal entry to record the prepayment on November 1, 20x1 under the
expense method?

Date Account titles Debit credit


11/01/20 Insurance Expense 360,000
x1
Cash 360,000
-to record pre-payment of 1 year
insurance

13. What is the adjusting entry on December 31, 20x1 under the asset method?

Date Account titles Debit credit


12/31/20 Insurance Expense 60,000
x1
Prepaid Insurance 60,000
-to record expired part of 1 year
insurance

14. What is the adjusting entry on December 31, 20x1 under the expense method?

Date Account titles Debit credit


12/31/20 Prepaid Insurance 300,000

4
x1
Insurance Expense 300,000
-to record unexpired part of 1 year
insurance

“Formal education will make you a living; self-education


will make you a fortune.” - Jim Rohn
- END -

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