a.

A review of insurance policies showed that P6,800 is unexpired at the

year-end.
b. An inventory of cleaning supplies showed P12,440 on hand.
c. Estimated depreciation on the building for the year is P128,000.
d. Accrued interest on the mortgage payable is P10,000.
e. On Sept. 1, the entity signed a contract, effective immediately with Bacolod
Doctor’s Hospital to dry clean, for a fixed monthly charge of P4,000, the
uniforms used by doctors in surgery. The hospital paid for four months’
services in advance.
f. Salaries are paid on Saturdays. The weekly payroll is P25,200. Assume
that Sept. 30 falls on a Thursday and the entity has a six-day pay week. up

ADJUSTING ENTRIES
Insurance Expense 27, 200

Prepaid Insurance 27, 200

Solution:
total/original cost of insurance (based on the trial balance) = 34,000
less: unexpired portion = 6,800
total expired portion = 27, 200

Cleaning Supplies Expense 61, 300

Cleaning Supplies 61, 300

Solution:
total/original cost of cleaning supplies = 73, 740
less: cleaning supplies on hand = 12, 440
consumed portion = 61, 300

Depreciation Expense-Building 128, 000

Accu. Depreciation-Building 128, 000

Interest Expense 10, 000

Interest Payable 10, 000

 Unearned Cleaning Revenue 4, 000

Cleaning Revenue 4, 000

Salaries Expense 16, 800

Salaries Payable 16, 800

Solution:
25,200 ÷ 6 (six-day pay week) = 4, 200
4,200 × 4 (thursday) = 16, 800

a. Nov. 1, 2020, Riabulin paid Juanita Rabena RealtorsP360,000 for six

months rent on the office building commencing that date.
b. Office Supplies on hand at Dec. 31, 2020 amounted toP27,000.
c. Depreciation Expense for the furniture amounted toP75,000 for the year.
d. At Dec. 31, 2020, P105,000 salaries have accrued.
e. 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%.

ADJUSTING ENTRIES

Rent Expense 120, 000

Prepaid Rent 120, 000

Solution:
360,000 × 2/6 = 120, 000
2 = (Nov. to Dec.) 6 = (six months rent)

Office Supplies Expense 36, 000

Office Supplies 36, 000

Solution:
original cost of office supplies = 63, 000
less: office supplies on hand = 27, 000
office supplies used = 36, 000
 Depreciation Expense-Furniture 75, 000

Acc. 75, 000

Depreciation-Furniture

Salaries Expense 105, 000

Salaries Payable 105, 000

Interest Expense 54, 000

Interest Payable 54, 000

Solution:
900,000 × 3/12 × 0.24 = 54, 000
3 = (Oct. to Dec.) 12 months= (will be repaid) 24% or 0.24 = (annual rate)

a. The P 360,000 prepaid advertising represents expenditure made on Nov. 1

2019 for monthly advertising over the next 18 months.
b. A count of the engineering supplies at May 31, 2020 amounted to 90,000
c. Depreciation on the surveying equipment amounted to 160,000.
d. One-third of the unearned survey revenues has been earned at the year-end.
e. At year-end salaries in the amount of 140,000 have accrued.
f. Interest of 60,000 on the notes payable has accrued at year-end.

ADJUSTING ENTRIES

Advertising Expense 140, 000

Prepaid Advertising 140, 000

Solution:
360,000×7/18 = 140, 000
7 = (Nov. 1 2019 to May 31, 2020) 18 = (monthly advertising)
Supplies Expense 180, 000

Engineering Supplies 180, 000

Solution:
total/original cost of engineering supplies = 270,000
less: unconsumed engineering supplies = 90,000
consumed engineering supplies = 180, 000

Depreciation Expense 160, 000

Acc.. Depreciation-Survey 160, 000

Equip.

Unearned Survey Revenues 40, 000

Survey Revenues 40, 000

Solution:
total/original cost of unearned survey revenues = 120, 000
multiply: one-third of unearned survey revenues (120,000)
120,00 × 1 / 3 = 40,000

Salaries Expense 140, 000

Salaries Payable 140, 000

Interest Expense 60, 000

Interest Payable 60, 000