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Problem #8
Preparing Adjusting Entries at Year-End
(0n June 30, 2020, the end of fiscal year, the following information is available to Noel
Hungria's accountants for making adjusting entries:
a. Among the liabilities ofthe entity is @ P2,400,000 mortgage payable. On June 30,
the accrued interest on this mortgage amounted to P120,000.
b. Assume that on, July 2, a Friday, the entity, which is on @ five-day workweek and
pays employees weekly, palc its regular salaried employees 192,000.
‘On June 29, the entity completed negotiations and signed a contract to, provide
services to a new client at an annual rate of P26,000.
d. The Supplies account showed a beginning balance of P16,150 and purchases
during the year of P37,660. The year-end inventory revealed supplies on hand of,
P11,860.
@. The Prepaid insurance account showed the following enttles on June 30:
Beginning Balance 15,300
January 1 29,000
May 1 33,560
‘The beginning balance represents the unexpired portion of a one-year policy
purchased in April of the previous year. The January 1 entry represented a new one-
‘ear policy, and the May 1 entry isthe additional coverage of a three-year policy.
£. The following teble contains the cost and annual depreciation for buildings and
equipment, all of which were purchased before the current year:
Cost ‘Annual Deoreciation
1,850,000 73,000
Equipment 2,180,000 218000
& On June 2, the entity completed negotiations with another client and accepted an
advance of P210,000 for services to be performed in the next year. The P210,000
‘was credited to Uneamned Service Revenues,
The entity calculated that as at June 30 it had eared P35,000 on a P75,000
contract that will be completed and billed in August.
Required: Prepare the adjusting entries. Problem #10
Preparing Adjusting Entries and an Adjusted Trial Balance
Presented below, together with account numbers, is the unadjusted trial balance of
Madelyn Rialubin Travel Agency for the year ended Dec. 31, 2020:
Madelyn Rslubin Travel Agency
Unadjusted Til Balance
‘Dec 31, 2020
310 Gash 126,000
120 Accounts Receivable 645,000
130 Prepaid Rent . 360,000
440 Office Suppies 3,000
150 Furnture 275,000
455 Accumulated Depreciction | P 435,000
210 Notes Payable ‘9¢0,000
220 © Accounts Payable 285,000
230 Salaries Payable
240 Interset Payable .
310 Ralubin, Capital 1,680,000
320. Raluoin, Witherawals 1,200,000
410 Travel Revenues 5133000
510 Salaries Expense “3,773,000
520 RentExpense
530 Office Supplies Expense
540 Depreciation Expense
550 Interest Expense *
S€0 —Wleesllaneeuecupanes 93,000
Totals a.433,000___Pa,439,000,
Information pertaining to Rialubin’s accounts is as fellows:
@. On Nov. 1, 2020, Rialubin paid Juanita Rabena Realtors P360,CO0 for six months’
rent on the office building commencing that date, .
Office supplies on hand at Dec. 31, 2020 amounted to P27,000.
Depreciation expense for the furniture amounted to P75,000 for the year.
At Dec. 31, 2020, P105,000 salaries have accrued.
The P900,000 note payable was issued on Oct. 1, 2020. It will be repaid in 12
months together with interest at an annual rate of 24%.
Required:
1. Prepare the adjusting entries.
2, Establish a ledger account for each account found in the unadjusted trial balance.
Enter the amount found in the unadjusted trial balance into the ledger accounts.
Post the adjusting entries. Compute the adjusted balances, Use page number 11
for the journal. s
3. Prepare an adjusted tral balance,
