Preparation of Adjusting Journal Entries

Psalm 16 Recruitment Services has been operating for 2 years now. At the end of December 31, 2016, these are the adjusting entries to their books before closing for the year:

1.) Office Supplies at the end of the year was verified to be P7, 500. At the beginning of the year, the office supplies beginning was P24, 500.

2.) The company borrowed money from the bank for P500,000 as additional working capital on October 1, 2016. At the end of December 31, 2016, the interest expense should be recorded to be charged by excluding the first day and including the last day.

3.) The service vehicle was bought for P500,000 on July 1, 2016. At the end of the year, record the depreciation expense using the straight-line method with an estimated useful life of 5 years.

4.) The company received a promissory note from their accredited foreign employer for P120,000 at an interest rate of 12% per annum. The note was dated September 1, 2016. Use 365 days in a year. Exclude the first day and include the last day in counting the number days.

5.) The company entered into a one (1) year advertising contract for P12, 000. The advertisement effected on October 1, 2016. Record the expense portion at the end of the year if company uses Asset Method of recording expenses.