QUIZ ON ADJUSTING ENTRIES
Prepare the adjusting entries required by the following information made available to you
on December 31, 2021 the end of the fiscal year.
1. On December 31, 2021, there are two notes on hand, a 60-day, 6% note for P800 dated
December 16, and a 40-day, 8% note for P900 dated December 1, on which no interest
has yet been collected.
2. The Unexpired Insurance account balance of P360 represents premium paid on a 3-year
fire insurance policy taken on September 1 of this year.
3. The payroll for the week consisting of 6 working days (Monday to Saturday) amounts to
P1,200. This is paid on Monday of the following week. December 31 fell on a Tuesday.
4. The business has accounts receivable of P3,000 at the end of the year. It is estimated that
only 95% of this amount is good and collectible.
5. On December 11, the business discounted the personal note of Mr. U.Tang a friend of the
owner, at 6%. The 60-day note for P900 was dated December 11. The interest of this
became part of the Interest Income account balance of P36 as of December 31.
6. On November 1 of this year the business entered into a 6-month advertising contract
which required an advance payment of P1,800. This was debited to Advertising Expense.
7. Unearned Rent account was credited for P240 representing the 6-month rent advanced by
a tenant on August 15 of the current year.
8. Office equipment costing P1,400 was purchased on July 1 of this year. It is estimated that
it can be used for five years which it shall have a value of P100.
9. Supplies Expense account has a balance of P850 representing the amount of supplies
bought during the period. The actual amount of supplies used, however, is only P700.
10. The business discounted on November 15 of this year its own 60-day note for P1,500
dated November 15, with Security Financing at 8%. The discount was debited to Prepaid
Interest.
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