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D00, having an estimat n estimated useful life d to have a total life . The estimated salva straight-line method

D00, having an estimat n estimated useful life d to have a total life . The estimated salva straight-line method

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PART 1 During your examination of the 20x3 financial statements of Goyo Company, the following data were discovered. Give any correcting and adjusting entries called for by the information given. Disregard any effects on income tax. Write your answers in the space provided. Adjusting Entries, December 31, 20x3 1. An office equipment purchased on January 2, 20x2, at the cost of P44,000, having an estimated salvage value of P4,000 and an estimated useful life of five (5) years, is now estimated to have a total life of 10 years from January 2, 20x2. The estimated salvage value remains unchanged, the straight-line method of depreciation is used. 2. Interest deducted in advance on notes payable amounts to P10,000. The Interest Expense account has a debit balance of P15,000. The company failed to record interest deducted in advance at the end of 20x1, P6,000; and at the end of 20x2, P6,200. All original entries were made to the Interest Expense account. 3. Merchandise in transit, December 31, 20x3, FOB shipping point, of P30,000 was not included in the inventory as of December 31, 20x3, but was entered in the Purchases account in 20x3. 4. Merchandise costing P12,000 was included in the inventory as of December 31, 20x2, but was not entered in the Purchases account until January 10, 20x3. 5. On July 1, 20x3, a three-year insurance policy was purchased for P7,200. Prepaid expenses did not appear on the December 31, 20x3 statement of financial position. 6. Store supplies inventory had been overlooked in adjusting the accounts in previous years. Store supplies on hand were: 20x1 – P900; 20x2 – P1,800. Store supplies on hand at the end of 20x3 amounted to P2.900.
Transcribed Image Text:PART 1 During your examination of the 20x3 financial statements of Goyo Company, the following data were discovered. Give any correcting and adjusting entries called for by the information given. Disregard any effects on income tax. Write your answers in the space provided. Adjusting Entries, December 31, 20x3 1. An office equipment purchased on January 2, 20x2, at the cost of P44,000, having an estimated salvage value of P4,000 and an estimated useful life of five (5) years, is now estimated to have a total life of 10 years from January 2, 20x2. The estimated salvage value remains unchanged, the straight-line method of depreciation is used. 2. Interest deducted in advance on notes payable amounts to P10,000. The Interest Expense account has a debit balance of P15,000. The company failed to record interest deducted in advance at the end of 20x1, P6,000; and at the end of 20x2, P6,200. All original entries were made to the Interest Expense account. 3. Merchandise in transit, December 31, 20x3, FOB shipping point, of P30,000 was not included in the inventory as of December 31, 20x3, but was entered in the Purchases account in 20x3. 4. Merchandise costing P12,000 was included in the inventory as of December 31, 20x2, but was not entered in the Purchases account until January 10, 20x3. 5. On July 1, 20x3, a three-year insurance policy was purchased for P7,200. Prepaid expenses did not appear on the December 31, 20x3 statement of financial position. 6. Store supplies inventory had been overlooked in adjusting the accounts in previous years. Store supplies on hand were: 20x1 – P900; 20x2 – P1,800. Store supplies on hand at the end of 20x3 amounted to P2.900.
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