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Quiz 4 - Depreciation and Adjusting Entries

Answer all the questions

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24 views

Quiz 4 - Depreciation and Adjusting Entries

Answer all the questions

Uploaded by

sanji4640
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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FUNDAMENTALS OF ACCOUNTING / BUSINESS MANAGEMENT

Quiz 4: Depreciation and Adjusting Entries

Part 1: Identify each of the events as accruals, deferrals or neither (3 points each)

1. Incurred operating expenses on account


2. Paid cash for utilities expense
3. Collected P12,000 in advance for services to be performed over the next 6 months
4. Paid cash to purchase supplies that are to be used over the next several months
5. Recorded expense for salaries owed to employees at the end of the accounting period
6. Made cash distribution to the owner
7. Provided services on account
8. Recognized interest on a note payable before cash is paid
9. Paid one year’s rent in advance
10. Purchased a computer with a 3-year life

Part 2: Depreciation Problem (3 points each)

Violeta Pitular operates a business center in Cabanatuan City. On January 1, 202A, she bought an office
equipment at a cost of P34,000. It has an expected useful life of 6 years and a salvage value of P4,000.

1. How much of the asset is subject to depreciation?


2. What will be the annual depreciation expense?
3. What is the adjusting entry to recognize depreciation for the year?
4. Determine the book value of the asset at the end of the year.
5. What is the book value of the asset after it has been depreciated for 6 years?

Part 3: Worksheet and Adjusting Entries (55 points)

At the end of the fiscal year, the trial balance for Ramon Condominiums appeared as shown. The following
information is also available:
a. Actual count of supplies shows that the company has P5,000 remaining supplies.
b. The company paid 1-year worth of advertising expenses on July 1. It was accounted using the asset
method.
c. The building has an estimated useful life of 25 years. Salvage value is P12,000. The building was
constructed in January 1, 2017.
d. The operating equipment has an estimated useful life of 5 years and was bought on March 1, 2021.
e. A customer paid P15,000 advanced rentals and was initially recorded as income.
f. Utilities amounting to P3,000 were unrecorded.
g. 1-year insurance premium paid on July 31, 2021 was initially recorded as an expense.
h. 2% of accounts receivable were deemed to be uncollectible.
i. P3,200 worth of rent from customer were not yet accrued.
j. P2,500 of notes payable were erroneously recorded in the accounts payable account.
Ramon Condominiums
Unadjusted Trial Balance
December 31, 2021

Accounts Debit Credit


Cash P350,000
Accounts Receivable 25,800
Supplies 14,200
Prepaid Advertising 9,600
Land 450,000
Building 350,000
Accumulated Depreciation – Building P54,080
Office Equipment 12,000
Accounts Payable 5,300
Ramon, Capital 1,047,620
Ramon, Drawing 3,200
Rent Income 120,000
Taxes and Licenses 500
Utilities Expense 6,300
Insurance Expense 5,400
TOTAL P1,227,000 P1,227,000

Required:
1. Prepare and adjusting journal entries
2. Prepare the adjusted trial balance using a worksheet

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