Lyceum of Cebu

SANTANDER CAMPUS
Brgy.Looc, Santander Cebu
Tel# 480 - 9015

COLLABORATIVE GROUP ACTIVITY NO. 2

ADJUSITNG AND CLOSING ENTRIES OF A SERVICE FIRM

Using the transactions of Dr. Who Clinic in the previous activity, analyze the following adjustments to
consider. Make an adjusting entry for the month ended January 2014 using the format below. Complete
the worksheet in the next page.

 Computer equipment residual value is P500 and estimated useful life is 5 years.
 Furniture and Fixtures residual value is P100 and estimated useful life is 5 years.
 Portion of the prepaid insurance is already expired for the month.
 On January 31, Dr. Who received a bill from PLDT amounting to P2,000 for the internet
connection of his clinic for the month of January. Dr. Who will pay this bill on the 11th of
February which is the due date.
 Supposed that on January 31, Dr. Who received an advance payment of P1,000 from a loyal
client for his check up scheduled on the 2nd week of February.
 January 31, an emergency check up was performed by Dr. Who to a patient that needs urgent aid
due to an accident. Immediate family of the patient promised to pay next week. Amount due is
P3,000.

J1
GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
2014
Jan-31 Depreciation Expense 325.00
Accumulated Depreciation 325.00
#To record depreciation of Computer

Jan-31 Depreciation Expense 248.33

Accumulated Depreciation 248.33
#To record depreciation of Furnitures & Fixtures

Jan-31 Insurance Expense 833.33

Prepaid Insurance 833.33
#To record expired portion of prepaid insurance

Jan-31 Utilities Expense 2,000.00

Utilities Payable 2,000.00
#To accrue utilities expense for the month

Jan-31 Cash 1,000.00

Unearned Revenue 1,000.00
#To record advance payment for services

Jan-31 Accounts Receivable 3,000.00

Professional Fees 3,000.00
#To record accounts receivable

7,406.67 7,406.67
 UNADJUSTED TRIAL BALANCE ADJUSTING ENTRIES ADJUSTED TRIAL BALANCE
Account Debit Credit
Code Account Name Balances Balances DR. CR. DR. CR.
101 CASH 118,000.00 1,000.00 119,000.00
111 ACCOUNTS RECEIVABLE - 3,000.00 3,000.00
131 PREPAID INSURANCE 10,000.00 833.33 9,166.67
145 FURNITURES AND FIXTURES 15,000.00 15,000.00
150 COMPUTERS 20,000.00 20,000.00
201 ACCOUNTS PAYABLE 15,000.00 15,000.00
212 NOTES PAYABLE 30,000.00 30,000.00
300 DR. WHO, CAPITAL 100,000.00 100,000.00
301 DR. WHO, DRAWING 3,000.00 3,000.00
406 PROFESSIONAL FEES 56,000.00 3,000.00 59,000.00
611 SALARIES EXPENSE 15,000.00 15,000.00
615 RENT EXPENSE 10,000.00 10,000.00
621 UTILITIES EXPENSE 2,500.00 2,000.00 4,500.00
625 ORGANIZATION EXPENSE 7,500.00 7,500.00
○ Depreciation Expense 573.33 573.33
○ Accumulated Depreciation 573.33 573.33
○ Insurance Expense 833.33 833.33
○ Utilities Payable 2,000.00 2,000.00
○ Unearned Revenue 1,000.00 1,000.00

Total 201,000.00 201,000.00 7,406.67 7,406.67 207,573.33 207,573.33

 STATEMENT OF FINANCIAL POSITION
As of January 31, 2014

ASSETS
Cash 119,000.00
Accounts Receivable 3,000.00
Prepaid Insurance 9,166.67
Furnitures & Fixtures 15,000.00
Less: Accumulated Depreciation - Furn&Fix 248.33 14,751.67

Computers 20,000.00
Less: Accumulated Depreciation - Computers 325.00 19,675.00
Total Assets 165,593.34

LIABILITIES
Accounts Payable 15,000.00
Notes Payable 30,000.00
Utilities Payable 2,000.00
Unearned Revenue 1,000.00
Total Liabilities 48,000.00

OWNER'S EQUITY
Dr. Who, Capital 100,000.00
Add/(Less): Net Income/Loss 20,593.34
120,593.34
Less: Dr. Who, Drawing 3,000.00
Total Owner's Equity 117,593.34

Total Liabilities & Owner's Equity 165,593.34

STATEMENT OF FINANCIAL PERFORMANCE

For the month ended January 31, 2014

INCOME
Professional Fees 59,000.00

EXPENSES
Salaries Expense 15,000.00
Rent Expense 10,000.00
Utilities Expense 4,500.00
Organization Expense 7,500.00
Depreciation Expense 573.33
Insurance Expense 833.33 38,406.66

NET INCOME/ (LOSS) 20,593.34

CLOSING ENTRIES:

GENERAL JOURNAL
Date Account Title and Explanation Ref Debit Credit
2014
Jan-31 Professional Fees 59,000.00
Income Summary 59,000.00
#To close revenue accounts to income summary

Jan-31 Income Summary 38,406.66

Salaries Expense 15,000.00
Rent Expense 10,000.00
Utilities Expense 4,500.00
Organization Expense 7,500.00
Depreciation Expense 573.33
Insurance Expense 833.33
#To close expense accounts to income summary

Jan-31 Income Summary 20,593.34

Dr. Who, Capital 20,593.34
#To close income summary to capital accounts

Jan-31 Dr. Who, Capital 3,000.00

Dr. Who, Drawing 3,000.00
#To accrue utilities expense for the month

121,000.00 121,000.00
 UNADJUSTED TRIAL BALANCE ADJUSTING ENTRIES ADJUSTED TRIAL BALANCE CLOSING ENTRIES POST-CLOSING TRIAL BALANCE
Account Debit Credit
Code Account Name Balances Balances DR. CR. DR. CR. DR. CR. DR. CR.
101 CASH 118,000.00 1,000.00 119,000.00 119,000.00
111 ACCOUNTS RECEIVABLE - 3,000.00 3,000.00 3,000.00
131 PREPAID INSURANCE 10,000.00 833.33 9,166.67 9,166.67
145 FURNITURES AND FIXTURES 15,000.00 15,000.00 15,000.00
150 COMPUTERS 20,000.00 20,000.00 20,000.00
201 ACCOUNTS PAYABLE 15,000.00 15,000.00 15,000.00
212 NOTES PAYABLE 30,000.00 30,000.00 30,000.00
300 DR. WHO, CAPITAL 100,000.00 100,000.00 3,000.00 20,593.34 117,593.34
301 DR. WHO, DRAWING 3,000.00 3,000.00 3,000.00 0.00
406 PROFESSIONAL FEES 56,000.00 3,000.00 59,000.00 59,000.00 0.00
611 SALARIES EXPENSE 15,000.00 15,000.00 15,000.00 0.00
615 RENT EXPENSE 10,000.00 10,000.00 10,000.00 0.00
621 UTILITIES EXPENSE 2,500.00 2,000.00 4,500.00 4,500.00 0.00
625 ORGANIZATION EXPENSE 7,500.00 7,500.00 7,500.00 0.00
○ Depreciation Expense 573.33 573.33 573.33 0.00
○ Accumulated Depreciation 573.33 573.33 573.33
○ Insurance Expense 833.33 833.33 833.33 0.00
○ Utilities Payable 2,000.00 2,000.00 2,000.00
○ Unearned Revenue 1,000.00 1,000.00 1,000.00
INCOME SUMMARY 38,406.66 59,000.00
INCOME SUMMARY 20,593.34
Total 201,000.00 201,000.00 7,406.67 7,406.67 207,573.33 207,573.33 121,000.00 121,000.00 166,166.67 166,166.67