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Accrued Revenue: This Is Handout 020 Accruals Please Use This Handout For Lesson 020 Adjusting Entries 4 - Accruals

This document provides examples and instructions for adjusting entries related to accruals, including accrued revenue, accrued expenses for salaries, and accrued interest payable. It discusses adjusting entries that must be made at the end of an accounting period for services received but not yet paid, salaries earned but not yet paid, and interest expense incurred but not yet paid. The examples are intended to demonstrate adjusting entries both with and without the use of reversing entries.

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Caryl May Esparrago Mira
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152 views3 pages

Accrued Revenue: This Is Handout 020 Accruals Please Use This Handout For Lesson 020 Adjusting Entries 4 - Accruals

This document provides examples and instructions for adjusting entries related to accruals, including accrued revenue, accrued expenses for salaries, and accrued interest payable. It discusses adjusting entries that must be made at the end of an accounting period for services received but not yet paid, salaries earned but not yet paid, and interest expense incurred but not yet paid. The examples are intended to demonstrate adjusting entries both with and without the use of reversing entries.

Uploaded by

Caryl May Esparrago Mira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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This is

Handout 020 Accruals

Please use this handout for


Lesson 020 Adjusting Entries 4 – Accruals

Accrued Revenue
Lipana Tax Consultancy rendered year-end tax compliance and consultancy services to ABC Company on
December 15-19, 2020 amounting to P50,000. It was ascertained that ABC Company will be paying Lipana
Tax Consultancy during the first quarter of 2021. Prepare the adjusting entry at December 31, 2020.

Accrued Expenses – Salaries on Work Week


Lipana Tax Consultancy pays their liaison officers on a weekly basis. The company has ten (10) liaison
officers receiving P3,000 weekly, every Friday. The last day of the year, December 31, 2020, fell on a
Thursday. Prepare the necessary adjusting entry on December 31, 2020, and the entry to record the
payment of the weekly salary on January 1, 2021, Friday.

Page 1 of 3
This is
Handout 020 Accruals

Please use this handout for


Lesson 020 Adjusting Entries 4 – Accruals

Accrued Expenses – Interest Payable


Lipana Tax Consultancy borrowed P200,000 from a bank, evidenced by a note of promise to pay on May
1, 2020 with an interest rate of 12%. Both the principal and the interest is payable after one year, that is,
April 30, 2021. Prepare all necessary entries (a) without the use of reversing entries and (b) with the use
of reversing entries.

Without reversing entries With reversing entries


(LESSON 026)
May 1, 2020
INITIAL ENTRY

December 31, 2020


ADJUSTING ENTRY

December 31, 2020 (to be discussed together with Lesson 026)


CLOSING ENTRY

January 1, 2021
REVERSING ENTRY

NO REVERSING ENTRY

April 30, 2020


REPAYMENT ENTRY

Page 2 of 3
This is
Handout 020 Accruals

Please use this handout for


Lesson 020 Adjusting Entries 4 – Accruals

Without reversing entries With reversing entries


(LESSON 026)

Interest Expense Interest Expense

Interest Payable Interest Payable

Page 3 of 3

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