Concept Check: Adjusting Entries

Vulture Consultancy Services closes its books every December 31 and correspondingly prepares year-end adjusting entries. Make the appropriate adjusting entry on the given transaction:

Vulture Consultancy Services was known for its advertising tactics in the industry. Hence, last October 31, Pizza Hut decided to sign a contract for a three year advertising campaign with the aim to launch and promote the new pizza flavors. In line with this, the Vulture Consultancy Services received P 1, 800, 000 for the contract.

• Unearned Advertising Income​ (DR): 100, 000

  Advertising Income (CR): 100, 000

• Unearned Advertising Income​ (DR): 300, 000

  Advertising Income (CR): 300, 000

• Unearned Advertising Income​ (DR): 150, 000

  Advertising Income (CR): 150, 000

• Unearned Advertising Income​ (DR): 250, 000

  Advertising Income (CR): 250, 000

Vulture Consultancy Services closes its books every December 31 and correspondingly prepares year-end adjusting entries. Make the appropriate adjusting entry on the given transaction:

On August 1, the company borrowed P 250, 000 from Metro Bank at 12% per annum.

• Interest Expense (DR): 12,500

  Interest Payable (CR): 12, 500

• Interest Expense (DR): 150,000

  Interest Payable (CR): 150, 000

• Interest Expense (DR): 30,000

  Interest Payable (CR): 30, 000

• Interest Expense (DR): 2,500

  Interest Payable (CR): 2, 500

Vulture Consultancy Services closes its books every December 31 and correspondingly prepares year-end adjusting entries. Make the appropriate adjusting entry on the given transaction:

The building has a cost of P 18, 000, 000 with salvage value of P 3, 000, 000 and an estimated useful life of 20 years. The building was acquired last April 1 of the current year.

• Depreciation Expense​ (DR): 562,500

  Accumulated Depreciation (CR): 562, 500

• Depreciation Expense​ (CR): 542,500

  Accumulated Depreciation (DR): 542, 500

• Depreciation Expense​ (DR): 62,500

  Accumulated Depreciation (CR): 62, 500

• Interest Expense (DR): 750,000

  Interest Payable (CR): 750, 000

Vulture Consultancy Services closes its books every December 31 and correspondingly prepares year-end adjusting entries. Make the appropriate adjusting entry on the given transaction:

15 workers are paid every Saturday for a six-day work at P 512 per day. December 31 falls on a Wednesday.

• Salaries Expense​ (DR): 23,040

  Salaries Payable​ (CR): 23,040

• Salaries Expense​ (DR): 53.760

  Salaries Payable​ (CR): 53.760

• Salaries Expense​ (DR): 30, 720

  Salaries Payable​ (CR): 30, 720

• Salaries Expense​ (DR): 46,080

  Salaries Payable​ (CR): 46, 080

Vulture Consultancy Services closes its books every December 31 and correspondingly prepares year-end adjusting entries. Make the appropriate adjusting entry on the given transaction:

On April 30, the company rented an office space in Makati as its branch office. It paid P 192, 000 for the annual rent and debited the amount to Prepaid rent.

• Rent Expense​ (DR): 128,000

  Prepaid Rent​ (CR): 128,000

• Rent Expense​ (DR): 112,000

  Prepaid Rent​ (CR): 112,000

• Rent Expense​ (DR): 144,000

  Prepaid Rent​ (CR): 144,000

• Rent Expense​ (DR): 160,000

  Prepaid Rent​ (CR): 160,000

Vulture Consultancy Services closes its books every December 31 and correspondingly prepares year-end adjusting entries. Make the appropriate adjusting entry on the given transaction:

Supplies purchased during the year amounted to P 8, 000 of which P 7, 600 was used during the year.

• Supplies Expense​ (DR): 7,600

  Supplies (CR): 7,600

• Supplies Expense​ (DR): 7,600

  Supplies Payable (CR): 7,600

• Supplies Expense​ (DR): 400

  Supplies (CR): 400

• Supplies Expense​ (DR): 400

  Supplies Payable (CR): 400

Vulture Consultancy Services closes its books every December 31 and correspondingly prepares year-end adjusting entries. Make the appropriate adjusting entry on the given transaction:

On November 1, Vulture Consultancy Services, borrowed P 100,000 at 12% interest. How much interest expense should Vulture Consultancy Services accrue as of December 31, and how does it record the accrual on that day?

• Interest Expense​ (DR): 2,000

  Interest Payable​ (CR): 2,000

• Interest Expense​ (DR): 12,000

  Interest Payable​ (CR): 12,000

• Interest Expense​ (DR): 3,000

  Interest Payable​ (CR): 3,000

• Interest Expense​ (DR): 4,000

  Interest Payable​ (CR): 4,000

On April 1, 2015, Company β pays P 48,000 for a twelve-month insurance in advance. Company β’s financial year ends on June 30, 2015. What is the appropriate adjusting entry on June 30, 2015?

• Insurance Expense​ (DR): 12, 000

  Prepaid Insurance (CR): 12, 000

• Insurance Expense​ (DR): 10, 000

  Prepaid Insurance (CR): 10, 000

• Insurance Expense​ (DR): 8, 000

  Prepaid Insurance (CR): 8, 000

• Insurance Expense​ (DR): 12, 000

  Prepaid Insurance Payable (CR): 12, 000

On September 1, 2016, Company M purchased a building at P 11,200,000. Buildings are depreciated using the straight-line depreciation method. Useful life of the building is 40 years.​ Salvage value of the building at the end of useful life is estimated as P 1, 120,000.

What is the amount of depreciation expense for 2016?

ABC Company has a P 35,000 note payable within one year. The note originated on July 1 of the current year and bears interest at the rate of 10.5%.

Compute for the required interest expense for the month ended November 31.

• 1, 531.30

• 1, 670.45

• 1,837.50

• 918.75