Question

Give the adjusting entries

1. Merchandise inventory at the end of the year,P84,400

2. Office Supplies used amounted to P3,450 Unused store supplies amounted to P6,000

3. 25% of the Prepaid Rent is used as of the end of the year Half of the Prepaid Insurance has expired

4. Office Equipment were depreciated at 10% per year Store Equipment has a useful life of 5years

5. Accrued Expenses

Utilities P4,320; Store Salaries, P3,500; Interest P16,250

6. Allowance of Uncollectible accounts is to be 10% of Receivables

Answer 1

Date		Dr.$	Cr.$
1	Inventory	84400
	Income statement (Trading account)		84400
2	Office Supplies expense	3450
	Office Supplies		3450
2	Store Supplies expense
	Store Supplies
3	Rent expense	25% of Prepaid rent
	Prepaid rent
4	Insurance expense	50% of prepaid insurance
	Prepaid Insurance
5	Depreciation expense - Office equipment	10% on cost
	Accumulated Depreciation - Office equipment
6	Depreciation expense - Store equipment	Cost /5
	Accumulated Depreciation - Store equipment
7	Utilities expense	4320
	Utilities payable		4320
8	Store salaries expense	3500
	Store salaries payable		3500
9	Interest expense	16250
	Interest payable		16250
10	Bad debt expense	10% of receivables
	Allowance for doubtful debts

Explanation

2. Unused store supplies amounted to P6,000

In this case amount is to be calculated by finding the difference between store supplies paid and unused store supplies of $6000. So that the amount of balance in the store supplies account will be $6000 at the end of the month.

10 . Allowance for doubtful debt

For this amount will be 10% of receivables. But if there is an opening credit balance in the allowance for receivables account, find out the difference between 10% calculated and the opening balance given. If the opening balance is debit we have to add the calculated amount (10% of receivables) along with the opening balance.