Problem on Accrual E. Gevera Realty Co. who owns a building in the downtown area in Davao City was partly rented by Metro Drug Company sometime last year. Based on their lease contract agreement, the rental will be paid every second day after the end of every month and it was being done on a consistent basis. The fiscal year will end on June 30 and payment of the rental will be made beyond this date. How will both accountants of E. Gevera Realty Company and Metro Drug Company take this up in the record as an adjustment in their respective books of accounts? Problem on Deferrals On August 1, 20A, Naneth Cabural Co. insured its property with Consolidated Insurance Company and pays premium of P24,000 for a one-year policy contract covering the period from Aug, 1, 20A to August 1, 20B. The accounting period ends on December 31, 20A. Assuming Expense Method is Used: 1. What is the journal entry to record the prepayment. ? In your adjusting entry, what account will you record, Expense or Asset? 8. What is the adjusting entry on December 31, 20A? 4. In your adjusting entry, are you increasing or decreasing the amount of your Insurance Expense account? Assuming Asset Method is Used: 1 2 3 4 What is the journal entry to record the prepayment. In your adjusting entry, what account will you record, Expense or Asset? What is the adjusting entry on December 31, 20A? In your adjusting entry, are you increasing or decreasing the amount of your Prepaid Insurance account? Nestor Alegre has insured his truck and building with Stronghold Insurance Co. The following data relates to the insurance coverage and premium payments: 1. 2. Amount Paid Property Insured Date of Coverage P 12,000 Building June 1, 20A - June 1, 20B Truck Oct. 1, 20A - Oct. 1, 20B 6,000 How much is the expired portion of the insurance premium payment on December 31, 20A? At what amount will the Prepaid Insurance or Unexpired Insurance show in the Balance Sheet as of Dec. 31, 20A. Assuming that the insurance of the building was recorded using the asset method, what is the adjusting entry on December 31, 20A? Assuming that the insurance of the truck was recorded using the expense method, what is the adjusting entry on December 31, 20A? 3. 4