Problem 4 Ahw Tsu prepares financial statements on the cash basis. The statement of financial position on December 31, 2020 and the income statement for the current year are as follows: Cash Furniture and equipment P1,500,000 2,500,000 P4,000,000 P1,000,000 Note payable Capital: Balance, January 1 Add: Net income P1,600,000 2,250,000 P3,850,000 850,000 Less: Withdrawals 3,000,000 P4,000,000 P5,000,000 Professional fees Expenses: Rent Supplies Other expenses Net income P1,200,000 800,000 750,000 2,750,000 P2,250,000 It was decided that the financial statements should be prepared on the accrual basis. Relevant information is as follows: 1) The furniture and equipment were acquired on July 1, 2019. The estimated life is 10 years. 2) The 12% promissory note us dated April 1, 2020 and matures in one year. Interest is payable on the date of maturity. 3) The accounts receivable as at December 31, 2020 and 2019 is P750,000 and P500,000, respectively. 4) Accrued rent on December 31, 2020, P100,000. 5) Unused office supplies as at December 31, 2020 and 2019 is P250,000 and P300,000, respectively. Required: a) Adjusting entries to convert the records to accrual basis of accounting b) Income statement c) Statement of financial position