Prepare the adjusting entries on December 31, 2019, the end of the annual accounting period,on the following independent data. Show your computations after each entry. 1. The Insurance Expense account had a debit balance on December 31, 2019 of P 36,000 representing premium for a 2-year fire insurance policy effective October 1, 2019. 2. Rent Income was credited for P 18,000 on November 1, 2019 representing nine months rent collected in advance. 3. Equipment per general ledger on December 31, 2019 shows a balance of P 372,000. Equipment acquired during the year was P 52,000 on April 1, 2019. All equipment is to be depreciated at the rate of 25% per annum. 4. As of December 31, 2019, commissions already earned but not yet collected amounted to P 48,000. 5. Office Supplies costing P 9,000 bought during the period was debited to the Office Supplies account. Of the amount, P 5,000 were consumed during the year. 6. Unearned Service Fees account showed a credit balance of P 80,000 per general ledger on December 31. Of this, 40% had been actually earned during the period. 7. On December 31, 2019 a 90-day, 9% Notes Payable has a balance of P 120,000 per general ledger. The note was issued on December 5, 2019. No interest has been taken on this note. 8. Unearned service revenue has a balance of P 400,000 of which 60% has been earned. 9. Notes Receivable has a balance of P 100,000 received from a client in settlement of an open account on November 16, 2019. The note is a 90-day, 12% note. No interest has been taken on this note. 10. The Prepaid Insurance account has balance of P 210,000 on December 31, 2019. The balance represented two fire insurance policies acquired during 2019. The first policy, Policy I for P 120,000 was acquired on March 1, 2019 and the second policy, Policy II was acquired on August 1, 2019 for P 90,000. Policy I is payment for a 2-year plan while Policy II is for a one-year plan.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Prepare the
1. The Insurance Expense account had a debit balance on December 31, 2019 of P 36,000 representing premium for a 2-year fire insurance policy effective October 1, 2019.
2. Rent Income was credited for P 18,000 on November 1, 2019 representing nine months rent collected in advance.
3. Equipment per general ledger on December 31, 2019 shows a balance of P 372,000. Equipment acquired during the year was P 52,000 on April 1, 2019. All equipment is to be
4. As of December 31, 2019, commissions already earned but not yet collected amounted to P 48,000.
5. Office Supplies costing P 9,000 bought during the period was debited to the Office Supplies account. Of the amount, P 5,000 were consumed during the year.
6. Unearned Service Fees account showed a credit balance of P 80,000 per
general ledger on December 31. Of this, 40% had been actually earned during the period.
7. On December 31, 2019 a 90-day, 9% Notes Payable has a balance of P
120,000 per general ledger. The note was issued on December 5, 2019. No
interest has been taken on this note.
8. Unearned service revenue has a balance of P 400,000 of which 60% has been earned.
9. Notes Receivable has a balance of P 100,000 received from a client in settlement of an open account on November 16, 2019. The note is a 90-day, 12% note. No interest has been taken on this note.
10. The Prepaid Insurance account has balance of P 210,000 on December 31, 2019. The balance represented two fire insurance policies acquired during 2019. The first policy, Policy I for P 120,000 was acquired on March 1, 2019 and the second policy, Policy II was acquired on August 1, 2019 for P 90,000. Policy I is payment for a 2-year plan while Policy II is for a one-year plan.
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