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Chapter 3

Chapter 3. Short Problems. Short Problem 1. Solution: Insurance Premium Debit | Credit 3200 | 1600 1200 | 1500 P12100- -> answer. Short Problem 2. Solution: Net Income 100,000 Depreciation (2,000) Accounts Rec. 20,000 Supplies 15,000

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Chapter 3

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  1. Chapter 3 Short Problems Ateneo Lex

  2. Short Problem 1 Solution: Insurance Premium Debit | Credit 3200 | 1600 1200 | 1500 P12100--> answer Ateneo Lex

  3. Short Problem 2 Solution: Net Income 100,000 Depreciation (2,000) Accounts Rec. 20,000 Supplies 15,000 Net Income, Dec. 31 P133,000 - Answer Ateneo Lex

  4. Short Problem 3 Solution: 95000 60000 285000 Ans=225000 95000 Accounts Receivable Unearned Rev 60,000 Revenues Cash Collection 15000 95000 Revenues Cash Collection 110,000 Deaq Gordon assists Filipino students upon their arrival in the United States. Paid by the Philippine government, Deaq Gordon collects some service revenue in advance. In other cases, he receives cash from said government after performing relocation services. At the end of August 2004, Deaq Gordon’s books report the following: July 31 August 31 Accounts Receivable 95,000 110,000 Unearned Service Rev. 60,000 15,000 If during August, Deaq Gordon Enterprises reported service revenue of P285,000 how much cash did the business collect from the Philippine government during that month? Ateneo Lex

  5. Short Problem 4 Solution: Revenues 390,000 Expenses 36,000 215,000 78,000 (329000) Net Income P61,000 Ateneo Lex

  6. Short Problem 5 Solution: Revenues: 252,000 Cash Revenue 240000 Less: expenses (142,500) Accounts Receivable 12000 Net Income109500 - ans Total Revenues 252000 Cash Expense 155000 Less: Accrued Expense (12500) Total Expense 142500 Ateneo Lex

  7. Accounts Receivable Cash Sales 15,000 A/R Sales 96,500111,500 Answer. 15,000 95,000 X=96500 16500 Accounts Receivable 96500 Revenue 96500 Short Problem 6 Solution: Ateneo Lex

  8. Short Problem 7 Solution: Cash Expense 75,000 Adj. Prepaid 900 Adj. Acc. Expense 3660 79560 -- Answer Ateneo Lex

  9. Short Problem 8 Solution: ORIX = 1,950,000/24 months x 11 months = 893,750 = 1056,250 PX = 2760,000/24 months x 6 months = 690,000 = 2070,000 AUTO LIFE = 1845000/36 months x 4 months = 205,000= 1,640,000 P4,766,250 - Answer Ateneo Lex

  10. Short Problem 9 Unearned Revenues 1,500,000 15,000,000 7,200,000 3,600,000 3600,000 - Answer Solution: Ateneo Lex

  11. 1500 1500 3200 1600 2000 3600 - Answer Short Problem 10 Solution: Ateneo Lex

  12. Short Problem 11 Solution: Accrued Rent Unearned Rent 1800 Rev. Cash 2400 1500 3000 29400 (ANS) 30000 1800 Revenue 3000 cash 4200 Ateneo Lex

  13. Short Problem 12 Solution: Net Income 80,000 Office Supplies (1,500) ServiceExpense 2,500 Accrued Interest (4,500) 76,500 --> Answer Ateneo Lex

  14. Short Problem13 Solution: 9000 x 3 = 450 --> Answer 5 x 12 Ateneo Lex

  15. Short Problem 14 Solution: Depreciation: Fees earned 15,000 9000 x 6 = 900 Unearned Fees (10,000) 5 x12 Depreciation (900) Salaries (6000) Adv. (150) Utilities (600) Answer:Net Loss (2650) Ateneo Lex

  16. Short Problem 15 Solution: Interest Exp. 20x2 = 80,000 x .10 = (3/12) = 2000 (ANS) Ateneo Lex

  17. Short Problem 16 Solution: 80000 x .10 x (6/12) = 4,000 (ANS) Ateneo Lex

  18. Short Problem 17 and 18 17. On March 1, 2000,the corporation signed a five-year lease agreement covering the rental of a copying machine. The P6,000 rental is payable annually,with the first payment due on March 1, 2001. The rental expense chargeable to operations in 2001, on a cash basis of accounting will be: Answer: P6,000 18. If the supplies account,before adjustment on May 31,indicated a balance of P2,250, and an inventory of supplies on hand at May 31 totaled P950, the adjusting entry would be: Solution: 2250 - 950 = 1300 Supplies Expense 1300 Supplies 1300 Ateneo Lex

  19. Short Problem 19 and 20 19. If the estimated amount of depreciation on equipment for the period is P2,000,the adjusting entry to record depreciation would be: Answer: Depreciation Expense 2000 Depreciation 2000 20. On January 2, 20X6, the company paid P6,000 for a three-year fire insurance policy. The company used the asset method upon recording the premium paid on January 2, 20X6. Under the going concern concept of accounting, the amount of prepaid insurance that should be shown on the company’s balance sheet as of Dec. 31, 20X7 is: Solution: Prepaid Insurance 6000 1/20x6 6000 Cash 6000 12/20x6 4000 Insurance Expense 2000 12/20x7 2000 (ANS) Prepaid Insurance 2000 Ateneo Lex

  20. Short Problem 21 and 22 21. Howard Company sublet a portion of its warehouse for five years at an annual rental of P18,000 beginning on May 1, 1999. The tenant paid one year’s rent in advance, which Howard recorded as a credit to unearned rental income. Howard reports on a calendar-year basis. The adjustment on December 31, 1999 should be: Solution: 18000/12 x 8 = 12,000 (Answer) 22.The corporation’s books showed a rent account with a balance of P1,800 for a one-year lease paid on January 31, 2000. What would be the correct amount of prepaid rent for the balance sheet as of December 31, 2000? Solution: 1800/12 x 11 = 1650 1800-1650 = P150 (ANSWER) Ateneo Lex

  21. Answer: P172,000 130,000 42,000 172,000 (ANS) Short Problem 23 and 24 Ateneo Lex

  22. P249350 - ANS P130000 - ANS Short Problem 25 and 26 Ateneo Lex

  23. Short Problem 27 and 28 27. The following information was gathered from a business using an incomplete method of accounting. Accounts receivables on January 1, 2000 totaled P34,000, collections from customers during the year were P142,000, and the accounts receivables on December 31, 2000, P36,000. How much were credited sales for 2000? Solution: Accounts Receivable 34000 ANS=144000 142000 36000 28. If the equipment account has a balance of P22,500 and its accumulated depreciation account has a balance of P14,000, the book value of the equipment is: ANS: 8500 Ateneo Lex

  24. Short Problem 29 29. William Company reported Prepaid Expenses of P150,000. Examination of the accounting records revealed that this account consists of the following items: Prepaid insurance (bought on March 1, 2004 covering one-year fire insurance for P12,000) Rent paid in advance in the amount of P120,000 covering six-months rental from October1, 2004 - March 31,2005. Supplies acquired January 1, 2004 amounting to P18,000. A physical inventory on December 31, 2004 disclosed that only P6,500 worth supplies are still on hand) The company is preparing its financial statements for the year ending December 31, 2004. What will be the adjusting entry to be made on the books to update accounts? Ans: a.Prepaid Insurance 12000 Cash 12000 b. Prepaid Rent 120,000 Cash 120,000 c. Supplies 18000 Cash 18000 Ateneo Lex

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