Review of the Accounting Process

Review of the Accounting Process - 2nd Flr, GF Partners...

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2 nd Flr, GF Partners Bldg, 139 H.V. dela Costa, Salcedo Village, Makati City Practical Accounting 1 Prof. R. M. Valdez Review of the Accounting Process 1. A business received cash of P300,000 in advance for service that will be provided later. The cash receipt entry debited Cash and credited Unearned Revenue for P300,000. At the end the period, P110,000 is still unearned. The adjusting entry for this situation will a. Debit Unearned revenue and Credit Revenue for P190,000 b. Debit Unearned revenue and Credit Revenue for P110,000 c. Debit Revenue and Credit Unearned Revenue for P190,000 d. Debit Revenue and Credit Unearned Revenue for P110,000 2. Prepaid Insurance has an ending balance of P23,000. During the period, insurance in the amount of P12,000 expired. The adjusting entry would contain a debit to a. Prepaid insurance for P12,000 c. Prepaid insurance for P11,000 b. Insurance expense for P12,000 d. Insurance expense for P11,000 3. On December 31, Printshop Property management made an adjusting entry to record P30,000 management fees earned but not yet billed to a client. This entry was reversed on January 1. On January 15, the client paid P120,000, of which P90,000 was applicable to the period January 1 through January 15. The journal entry made by Printshop to record receipt of the P120,000 on January 15 includes a. A credit to Management Fees Earned of P120,000 b. A credit to Accounts Receivable of P30,000 c. A debit to Management Fees Earned of P30,000 d. A credit to Management Fees Earned of P90,000 4. On December 31, Lotus made an adjusting entry to record P11,000 accrued interest payable on its note. This entry was reversed on January 1. On January 15, the note was paid. The payment included interest of P25,000. The entry to record the payment of January 15 should a. Debit Interest Expense of P25,000 b. Debit Accrued Interest Payable of P25,000 c. Debit Interest Expense of P14,000 and accrued Interest Payable of P11,000 d. Debit Interest Expense of P14,000 and credit accrued Interest Payable of P11,000. 5. Windows Company sublet a portion of its office space for ten years at an annual rental of P360,000, beginning on May 1. The tenant is required to pay one year’s rent in advance, which Windows recorded as a credit to Rental Income. Windows reports on a calendar-year basis. The adjustment on December 31 of the first year should be a. Rental Income 120,000 Unearned Rental Income 120,000 b. Rental Income 240,000 Unearned Rental Income 240,000 c. Unearned Rental Income 120,000 Rental Income 120,000 d. Unearned Rental Income 240,000 Rental Income 240,000 6. Dbase Company paid P170,400 on June 1, 2002, for a two-year insurance policy and recorded the entire amount as Insurance Expense. The December 31, 2002, adjusting entry is a. debit Prepaid Insurance and credit Insurance Expense, P49,700
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Practical Accounting 1 Review of the Accounting Process page 2 b. debit Insurance Expense and credit Prepaid Insurance, P49,700 c.
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This note was uploaded on 01/21/2011 for the course ACC 452 taught by Professor Mr.cula during the Spring '10 term at Abraham Baldwin Agricultural College.

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Review of the Accounting Process - 2nd Flr, GF Partners...

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