1. Your examination of the financial statements of SHEKIN Company disclosed the following transactions during the year: A. The company paid 1-year insurance premium of P108, 000 effective April 1, 2020. B. During 2020, SHEKIN Company bought office supplies totaling P80,000. At the end of the year, unused office supplies amounted to P20,000. Requirements. a) Prepare the original entries to record the transactions and the corresponding adjusting journal entries on December 31, 2019 using the 1) asset method and 2) expense method. b) By how much would the net income of 2020 be misstated if no adjustments were made at the end of the year?
1. Your examination of the financial statements of SHEKIN Company disclosed the following transactions during the year: A. The company paid 1-year insurance premium of P108, 000 effective April 1, 2020. B. During 2020, SHEKIN Company bought office supplies totaling P80,000. At the end of the year, unused office supplies amounted to P20,000. Requirements. a) Prepare the original entries to record the transactions and the corresponding adjusting journal entries on December 31, 2019 using the 1) asset method and 2) expense method. b) By how much would the net income of 2020 be misstated if no adjustments were made at the end of the year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. Your examination of the financial statements of SHEKIN Company disclosed the following transactions during the
year:
A. The company paid 1-year insurance premium of P108, 000 effective April 1, 2020.
B. During 2020, SHEKIN Company bought office supplies totaling P80,000. At the end of the year, unused office
supplies amounted to P20,000.
Requirements. a) Prepare the original entries to record the transactions and the corresponding adjusting journal
entries on December 31, 2019 using the 1) asset method and 2) expense method. b) By how much would the net
income of 2020 be misstated if no adjustments were made at the end of the year?
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