Other data: a. The annual depreciation on the equipment is P8,000. b. The advertising expense is for a one-year advertisement on a local paper starting July 1, 2020. Advertising expense was debited upon payment. c. The note payable was signed by McAllister on August 1, 2020 and bears an annual interest of 8%. The note matures on July 31, 2023 d. The note receivable was received by McAllister on April 1, 2020 and bears an annual interest of 12%. The note matures on March 31, 2021. e. The prepaid insurance is a one-year policy starting May 1, 2020. f. Salaries of P2,800 are accrued and unpaid at December 31. g. A count of the supplies shows P1,200 of unused supplies on December 31. h. One-third of the unearned service revenue has been earned. i. Utilities accrued at the end of the year is P4,000

Required: 1. Prepare the adjusting entries on December 31.

2. Prepare the adjusted trial balance. 3. Prepare the profit or loss statement for the year ended December 31, 2020.

Presented below is the unadjusted trial balance of McAllister Services as of December 31, 2020. Credit Debit 12,000 16,000 20,000 5,000 80,000 72,000 24,000 12,000 Accounts receivable Accumulated depreciation - Equipment Advertising expense Cash Equipment McAllister, capital McAllister, drawings Note payable Note receivable Prepaid insurance Salaries expense Service revenue Supplies expense Unearned service revenue Utilities expense Total 40,000 18,000 60,000 200,000 20,000 27,000 48,000 327,000 327,000