Accounting Cycle (May 10) PDF

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1) RR 

RR

Use the following information for the next two (2) questions:

Use the following information for the next two (2) questions: When the accounts of Daniel Barenboim Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period. 

The prepaid insurance account shows a debit of P5,280, representing the cost of a 2-year fire insurance policy dated August 1 of the current year.



On November 1, Rent Revenue was credited for P1,800 representing revenue from a sub rental for a 3month period beginning on that date.

1) What is the correct adjusting entry at December 31 for the first bullet? A.

Insurance Expense

1,100

Prepaid Insurance B.

Prepaid Insurance

C. 1,100

4,180

Prepaid Insurance

1,100

Insurance Expense

Insurance Expense

D. 1,100

Prepaid Insurance

4,180

4,180

Insurance Expense

4,180

2) What is the correct adjusting entry at December 31 for the second bullet? A.

Rent Revenue

600

C.

Unearned Rent B.

Unearned Rent Rent Revenue

600 600

Rent Receivable

600

Unearned Rent D.

600

Unearned Rent Rent Receivable

600 600 600

3) The trial balance shows supplies P2,700 and Supplies Expense P0. If P1,200 of supplies are on hand at the end of the period, the adjusting entry is A.

Supplies

1,200

Supplies Expense B.

Supplies Supplies Expense

C. 1,200

1,500

1,500

Supplies D.

1,500

Supplies Expense Supplies Expense Supplies

1,500 1,200 1,200

4) The unadjusted trial balance shows Supplies Expense of P3,000. If P1,600 of supplies are on hand at the

end of the period, the adjusting entry is:

A.

Supplies

1,600

Supplies Expense B.

Supplies Expense

C.

Supplies

1,600 1,600

Supplies

1,400

Supplies Expense D.

Supplies Expense

1,600

1,400 1,400

Supplies

1,400

5) Dogue Company prepared its unadjusted trial balance and determined that the totals of debits and credits do not equal. Further investigation revealed the following: 

The debit positing for a cash sale was omitted.

2,000



The balance of inventory was listed a credit instead of debit

12,000



The balance of insurance expense was listed as Rent expense

3,000



Unearned interest income was listed as a debit instead of

5,000

credit

How much is the difference between the total debits and total credits in the trial balance? A

31,000

B.

26,000

C.

16,000

D.

4,000

.

6) The credit total of a trial balance exceeds the debit total by P350. In investigating the cause of the difference, the following errors were determined: 

A credit to accounts receivable of P550 was not posted;



A P5,000 debit to be made to the Purchases account was debited to Accounts payable instead;



A P3,000 credit to be made to the Sales account was credited to Accounts receivable account instead



The interest payable account balance of P4,500 was included in the trial balance as P5,400.

Compute for the correct balance of the trial balance A.

8,350

C.

7,450

B.

8,000

D.

4,450

7) The trial balance of Mountain Dog shows a debit amount of P936,700 and a credit amount of P937,500. An examination of the ledger shows the following errors made by Mountain Dog Company: 

Cash received made from customers on account was recorded (both dr and cr) as P200,000 instead of P20,000.



The purchase on account of a computer table for P70,000 was recorded as a debit to Office expense and a credit to Accounts payable.



Purchases of inventory units on account was recorded as P291,000 instead of P219,000.



Service performed on account for a client, P18,000 was recorded as a debit to Accounts receivable for P18,000 and a credit to Service revenue of P1,800.



A payment of P6,500 for utilities used was posted as a debit to Utilities Expense and a debit to Cash.



The rent expense account was totaled at P60,000 instead of P70,000, while the interest income was

totaled at P75,000 instead of P55,000.

The correct debit/credit column totals should be A

933,700

B.

861,700

C.

855,200

D.

681,700

.

8) Dalmatian Company records all disbursements using nominal accounts (i.e., expense method). On December 31, 2011, Dalmatian Company has total expenses of P1,000,000 before considering the following: 

Advertisement costs paid during December 2011 totaled P10,000. The advertisement was aired on TV on January 5, 2012.



A two-year insurance on assets was obtained on July 1, 2011 for P24,000.



On July 15, 2011, Dalmatian entered into operating lease requiring monthly payments of P60,000 starting on the date of lease contract and monthly thereafter.



Office supplies expense has a balance of P20,000. The physical count of office supplies revealed a balance of P16,000.

Compute for the adjusted expenses A

1,060,000

B.

950,000

C.

936,000

D.

926,000

.

9) During 2016, English Setter Company entered into two advertising contracts and paid a total of P534,000. A real account was debited for this advance payment. The contract provides for a monthly ad placement in two widely read magazines. The terms of the contracts are as follows: Contract

Date

Amount

# of Issues

FHM Magazine

August 1

P234,000

9 months

SHAPE Magazine

October 1

P300,000

15 months

The first ad placement runs in the month in which the contract is signed. The appropriate adjusting entry to be made at December 31, 2016 includes: A.

Credit Advertising expense P190,000

C.

Debit Advertising expense P190,000

B.

Credit Prepaid asset P344,000

D.

Debit prepaid asset P190,000

10) Finnish Company began subleasing office space in its new building on July 1, 2016. At December 31, Finnish Company had the following rental contracts that are paid in full for the entire term of the lease. Finnish Company recorded all advance collections initially under a revenue account. Date

Term (months)

Monthly Rent

No. of Leases

9

P1,500

2

15

P3,500

5

October 1 November 1

The appropriate adjusting entry to be made at December 31, 2016 includes A.

Debit Rent revenue P49,100

C.

Debit Rent revenue P44,500

B.

Debit Rent revenue P245,500

D.

Debit Unearned rent P289,500

11) The inexperienced accountant of Doberman Company prepared the following closing entry on December 31, 2011: Date December

Account 31,

Debit

Prepaid insurance

Credit

10,000

2011 Accrued interest expense

2,000

Cost of goods sold

170,000

Interest income

20,000

Dividend income

30,000

Unrealized gain – OCI

5,000

Income summary

447,000

Dividends

12,000

Sales

450,000

Operating expenses

200,000

Finance cost

2,000

Accrued interest income December

31,

20,000

Retained earnings

447,000

2011 Income summary

447,000

How much is the correct amount of “income summary” to be closed to retained earnings? A

138,000

B.

130,000

C.

128,000

D.

100,000

.

12) The office supplies account of Springer Company had a balance at the beginning of 2013 of P80,000 before the reversing entry. Payments for purchases of office supplies during 2013 amounted to P500,000 and were recorded as expense. A Physical count at the end of 2013 revealed office supplies costing P95,000 were on hand. Reversing entries are recorded by Springer. The required adjusting entry at the end of 2013 will include a debit to A.

Office supplies P15,000

C.

Office supplies expense P485,000

B.

Office supplies P95,000

D.

Office supplies expense P15,000

Use the following information for the next two (2) numbers: On September 30, 2011, Spaniel Company issued a P1,000,000, 12%, 4-year note payable to Dogs, Inc. Principal, in 4 equal annual installments, and interest are payable every September 30. Spaniel Company records disbursements for expenses using nominal accounts. At December 31, 2011, the following adjusting entry was made to take up the accrued interest: Date December

Account 31,

Interest expense

Debit

Credit

30,000

2011 Interest payable

30,000

13) If no reversing entries are made, the adjusting entry on December 31, 2012 to take up accrued interest includes: A.

Debit Interest payable P7,500

C.

Debit Interest expense P7,500

B.

Debit Interest expense P22,500

D.

Debit Interest payable P22,500

14) If reversing entries are made, the adjusting entry on December 31, 2012 to take up accrued interest includes: A.

Debit Interest payable P7,500

C.

Debit Interest expense P7,500

B.

Debit interest expense P22,500

D.

Debit interest payable P22,500

15) Chronos Company paid P12,960 for a four-year insurance policy on September 1 and recorded the P12,960 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Chronos make on December 31, the end of the accounting period? A.

Prepaid Insurance

P810

Insurance Expense B.

Insurance Expense

C. P810

P1,080

Prepaid Insurance

Insurance Expense

P3,240

Prepaid Insurance D.

Prepaid Insurance

P1,080

P3,240

P11,880

Insurance Expense

P11,880

16) Fayde Company received P12,000 from a tenant on December 1 for four months’ rent of an office. This rent was for December, January, February, and March. If Fayde debited Cash and credited Unearned Rental Income for P12,000 on December 1, the necessary adjustment December 31 would include A.

Debit Rental income P3,000

C.

Debit Unearned rental income P9,000

B.

Credit Rental income P3,000

D.

Credit Unearned rental income P9,000

17) The Madman Company has a beginning and ending balance of Prepaid Insurance amounting to P5,600 and P6,400 respectively. During the year, an additional business insurance policy was purchased. A 2-year premium of P2,500 was paid and charged to Prepaid Insurance. What is the adjusting journal entry at yearend? A.

Dr. Insurance expense & Cr. Prepaid insurance

C.

Dr. Prepaid insurance & Cr. Insurance expense

1,700 B.

800

Dr. Prepaid insurance & Cr. Insurance expense

D.

1,700

Dr. Prepaid insurance & Cr. Insurance expense 6,400

18) Tremble Company has a beginning and ending balance of Unearned Rent amounting to P11,000 and P15,000 respectively. Warehouse quarterly rent received in advance is P18,000. During the year, equipment was rented to another company at an annual rent of P9,000. The quarterly rent payments were credited to Rent Income; the annual equipment rental was credited to Unearned Rent. What is the adjusting journal entry at year-end? A.

Dr. Rental income & Cr. Unearned rent

C.

Dr. Rent income & Cr. Unearned rent P5,000

D.

Dr. Unearned rent & Cr. Rent income P5,000

P4,000 B.

Dr. Unearned rent & Cr. Rental income P4,000...