ACTIVITY 1: Prepare the adjusting entries from the following information which you gathered on

December 31, 2007, at the end of the accounting period. 5 points each number.

1. On June 1, 2007, the business entered into a one-year advertising contract with Sagnit Advertising Co.
A payment of P12,000 was made on that date. The expense method was used.
Advertising Expense 12,000
Cash 12,000
Prepaid Expense 5,000
Advertising Expense 5,000

2. The business discounted on Nov. 1, 2007 its 90-day, 6% note for P10,000 with Sharkis Lending
Institution. The discount was charged to Interest Expense.
Interest Expense 100
Interest Payable 100

3. The office equipment costing P21,500 was purchased on May 31, 2007. It is estimated that it can be
used for five years with a scrap value of P1,500.
Depreciation Expense 2,667
Accumulated Depreciation 2,667

4. Unearned commission was credited for P3,500. One-half of this amount has been earned as of Dec,
31, 2007.
Unearned Commission 1,750
Service Income 1,750

5. Supplies expense account has a balance of P3,000 representing the amount of supplies bought during
the period. Supplies on hand at the end of December amounted to P1,000.
Supplies 1,000
Supplies Expense 1,000

6. The Accounts Receivable of the business has a balance of P3,000. It is estimated that only 95% is
collectible. There is no allowance carried in the books.

7. The payroll for a week of six working days (Monday to Saturday) amounts to P6,000. This is paid every
Saturday.
Dec. 31 fell on a Thursday.

8. On Dec. 31, 2007, there are two notes on hand, a 60-day 12% note for P6,000 dated Dec. 1, 2007 and
a note for P3,000 dated Nov. 30, 2007. No interest has yet to be collected.

9. Furniture and fixtures costing P5,000 were recorded in the books. One-half of this was acquired only
on July 1, 2007. No salvage value is expected after five years.
10. Received a 90-day, 12% note from a client amounting to P5,000 on November 15, 2007. No interest
has been taken up.

ACTIVITY 2: For 50 points, prepare the adjusting trial balance on comprehensive illustration provided by
this module.