EXERCISE ON ADJUSTING ENTRIES.

Prepare the necessary adjusting entries. Assume December 31, 2019 as the end of
the accounting period unless otherwise stated.

1. Interest earned but not yet collected on an 18%-60-day note for P 31,450 is
due on January 10, 2020.

2. A contract was entered into with ALEXI BEAUTY PRODUCTS. Per agreement,
Angelo Enterprises is authorized to sell ALEXI products on a 12% commission
basis. Sales made in December totaled P72,420. No entry has yet been made
to record the commission.

3. Utility bills from MERALCO and MAYNILAD for the month of December, 2019 amounted
to P12,400 and P6,703.75, respectively. These are due for payment next month.

4. Shown below are the notes issued by GELLAINE:

Note Principal Interest Term Date f note

A P 85,000 19% 6 months 08-31-2019
B 42,500 14% 90 days 10-04-2019
C 25,750 15% 60 days 11-18-2019

5. A one-year subscription to Manila Bulletin, a daily newspaper, was paid by HERBERT

TRADING on June 25 for P 5,400. Subscription starts on July 1. The company closes
its books every September 30 and uses real accounts in recording deferrals.

6. The general ledger of DANO HARDWARE showed unadjusted Prepaid Rent account at
P125,000 at year-end, March 31, 2019. This represents a 5-month advance rental
payment to its lessor from December 1, 2018 to April 30, 2019.

7. BLUE COMPANY receives a 12% commission from its suppliers for the sale of their
products. Commissions received by the company is based on estimated sales of
P90,000. Actual sales made by the company in September totaled P86,570. The
company operations end September 30 and uses real accounts in recording deferrals.

8. The P100,000 Unearned Commissions balance at year-end represents the amount the
company received from K. REDIT at the start of year 2019, as payment for 5% sales
commission for the year. The company’s 2019 sales totaled P1,660,000.

9. On December 31, 2019 TOLOSA COMPANY has office furniture costing P86,950 as
shown below:

Office Cost Scrap Useful Date Purchased

Furniture Value Life 2019
A P 60,000 P 4,500 7 yrs. March 15
B 26,950 3,100 10 yrs. May 1
10. The company has the following account balances at year-end:

Accounts receivable 142,850

Allowance for doubtful accounts 5,350

Case A: 10% of outstanding accounts receivable are estimated to be doubtful of

collection.
Case B: The allowance account is to be increased by P13,500.

Prepare adjusting entry for Case A and B above.

11. HUGZ COMPANY uses the aging analysis in determining its doubtful accounts. Accounts
receivable shows a balance of P203,470 as of December 31, 2019 before adjustment.
Analysis of the accounts revealed the following:

Accounts % Doubtful Estimated

Receivable Age of Accounts Of Doubtful Accounts
Collection
P54,600 Not yet due 1%
75,900 1-30 days due 3%
15,750 31-60 days due 6%
31,820 61-90 days due 8%
16,900 91-120 days due 10%
8,500 Over 120 days 25%
due
P203,470

Required: Complete the table and prepare the adjusting entry to record the doubtful accounts
expense assuming Allowance for doubtful accounts has a credit balance of P 4,780
before adjustment.

12. The company has beginning merchandise inventory amounting to P25,300. Physical count
conducted at the end of year showed ending merchandise inventory totaled P12,400.

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