Question

Instruction:

Prepare the correct adjusting entry for the year ended December 31, 2021.  Write your answer in the journal sheet or a yellow paper.  Take a photo or scan your answer and upload to google form/Microsoft form.

The Insurance Expense account has a debit balance on December 31, 2021 of P72,000 representing premium for a 2-year fire insurance policy effective October 1, 2021.

Rent Income was credited for P36,000 on November 1, 2021, representing nine months rental collected in advance.

As of December 31, 2021, commissions already earned but not yet collected amounts to P38,000.

Supplies costing P18,000 bought during the period was debited to the Supplies account.  Of the amount, P10,000 were consumed during the year.

Unearned Revenue account showed a credit balance of P56,000 per ledger on December 31.  Of this, 60% had been actually earned during the period.

On December 31, 2021, a 60-day, 9% Note Payable has a balance of P240,000 per ledger.  The note was issued on December 1, 2021.  No interest has been taken on this note.

Unearned Revenue has a balance of P200,000 of which 40% has been earned.

Note Receivable has a balance of P120,000 received from a customer in settlement of an account on November 16, 2021.  It is a 90-day, 12% note.  No interest has been taken on this note.

The Prepaid Insurance account has balance of P210,000 on December 31, 2021.  The balance represents two fire insurance policies acquired during 2021.  Policy 1 for P120,000 was acquired on March 1, 2021, and Policy 2 was acquired on August 1, 2021, for P90,000.  Policy 1 is payment for a 2-year plan while policy 2 is for a one-year plan.

Unearned Interest Income of P15,000 is recorded of which P10,000 is already earned as of December 31, 2021.

Interest Expense of P14,500 is recorded of which P3,500 is paid in advance. 

The Supplies account has a balance of P20,000 on December 31, of which P3,000 is unused.

Notes Payable has a balance of P100,000 issued by the company on December 16, 2021.  The term is 120 days with interest rate of 9%.

Note Receivable has balance of P150,000 received by the company from a customer on November 1, 2021.  The term is 09 days with interest of 12% per annum.

Prepaid advertising balance ledger amounted to P50,000 of which P8,000 applies to the year 2022.

Unpaid taxes as of December 31, 2021, amounted to P70,000.

The Unearned Rent account at December 31, 2021 is P10,500 representing receipt of an advance on December 1, of five months’ rent from tenants.

Revenue accrued but unbilled at December 31, 2021 amounted to P20,000.

Salaries accrued but not paid at December 31, 2021 amounted to P5,000.

The Supplies Expense account balance on December 31, amounted to P4,000.  The supplies on hand on December 31, amounted to P1,000.

Interest income of P15,000 is recorded of which P10,000 is already earned as of December 31, 2021.

Advertising expense balance per ledger amounted to P50,000 of which P8,000 applies to the year 2021.

Prepaid Interest of P14,500 is recorded of which P3,500 applies to the year 2021.

Unpaid taxes, P10,000.

Prepaid Rent account had a debit balance of P30,000, representing five-month rent beginning December 1, 2021.