The trial balance of Sunray Co. is shown below.

The following are the year -end adjustments:

1.       2% of the total accounts receivable is doubtful of collection.

2.       Depreciation for the year is not recognized. The equipment has a a10-year useful life. Sunray Co. uses the straight-line method.
3.       The notes payable was issued on September 1, 20x1. Interest of 10% is due annually.
4.       Sunray rents its office space. Monthly rental of P2,000 is due at the end pf each month. Sunray Co. has not yet paid its rent for the month of December 31, 20x1.

Requirements:
a.       Prepare the adjusting entries.
b. Complete the worksheet. (sheet2

a. Adjusting Entries:

1. Bad Debts Expense P1,000 (P50,000 x 2%)

Allowance for Bad Debts P1,000

2. Depreciation Expense P10,000 (P100,000 / 10)

Accumulated Depreciation P10,000

3. Interest Expense P800 (P24,000 x 10% x 4/12)

Interest Payable P800

4. Rent Expense P2,000

Rent Payable P2,000
for the month of December 31, 20x1.
 Sunray Co.
Worksheet
December 31, 20X1

Unadjusted trial Blance Adjustments Adjusted Trial Balance Income Statement Statement of Financial Position
Accounts Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr.
Cash 60,000 P 60,000 P 60,000
Accounts Receivable 50,000 50,000 50,000
Inventory 40,000 40,000 40,000
Equipment 100,000 100,000 100,000
Accu. Depreciation 10,000 P 10,000 P 20,000
Accounts Payable 5,000 5,000
Notes Payable 24,000 24,000
Sun Ray, Capital 109,000 109,000
Service Fees 220,000 220,000 220,000
Salaries Expense 96,000 96,000 96,000
Rent Expense 22,000 P 2,000 24,000 24,000
Totals 368,000 368,000
Adjustments:
Bad debts expense 1,000 1,000 1,000
Allowance for bad debts 1,000 1,000
Depreciation expense 10,000 10,000 10,000
Interest expense 800 800 800
Interest payable 800 800
Rent Payable 2,000 2,000
Totals P 13,800 P 13,800 P 381,800 P 381,800 P 131,800 P 250,000
88,200
P 220,000 P 220,000 P 250,000
tement of Financial Position
Cr.

P 20,000
5,000
24,000
109,000

1,000

800
2,000
P 161,800
88,200
P 250,000