Problem 2

Instruction: Using a journal entry, all necessary year end adjusting entries on the following independent cases:

1) A prepaid account was debited on July 1 for the payment of a two-year advance rental of P48,000.

2) An insurance expense account was debited on October 1 for a 3-year coverage commencing in the fourth quarter of the year, P36,000.

3) The owner pays his assistance every Friday. The year ends on Tuesday when the assistance has to be paid P10,000 for work already performed. 4) Two percent of the accounts receivable balance of P100,000 is estimated to be uncollectible.

5) Annual depreciation on the building amounting to P12,000 is still unrecorded. 6) Interest on notes receivable amounts to P8,000.

7) Interest on notes issued amounts to P16,000.

8) Given the following information:

Unused supplies, January 1 16,000

Supplies purchased 4,000

Physical inventory count, December 31 8,000

Purchase returns on supplies bought 200

9) Unearned service income balance of P18,000 includes P6,000 representing the corresponding services for which had been performed.

10) Service income balance of P25,000 includes P4,000 the corresponding services for which are yet to be performed.

11) An examination of the records for insurance policies purchased in the current year reveals the following:

Policy Date of Purchase Life of Policy Cost

A July 1 3 years P72,000

B March 1 2 years 36,000

C August 1 1 year 12,000

The Insurance Expense account was debited for the cost of each policy at the time of purchase. Another insurance for 5 years, Policy D, was purchased on October 1 of the previous year for P180,000.