At the end of its first month of operations, Watson Answering Service has the following unadjusted trial balance:

Watson Answering Service

August 31, 2020

Trial Balance

Debit Credit

Cash P5,400

Accounts Receivable2,400

Supplies2,800

Prepaid Insurance1,300

Equipment60,000

Notes PayableP40,000

Accounts Payable2,400

Ray Watson, Capital30,000

Ray Watson, Drawing1,000

Service Revenue4,900

Salaries Expense3,200

Utilities Expense800

Advertising Expense400

P77,300 P77,300

Other data:

1. Insurance expires at the rate of P200 per month.

2. P1,000 of supplies are on hand at August 31.

3. Interest of P500 on the notes payable has accrued during August.

Instructions:

(a) Prepare a worksheet

(b) Prepare a classified balance sheet assuming P35,000 of the notes payable are long-term.

(c) Journalize the closing entries.