Instruction: Prepare adjusting entries based on the following information:

On June 30, 2019, the end of a fiscal year, the following information is available to Noel Hungria’s
accountants for making adjusting entries:

a. Among the liabilities of the entity is a P2,400,000 note payable. The note bears interest of
12% per annum payable in quarterly installments. The last installment was paid on April 30,
2019, with the next installment due on July 31, 2019.
b. Assume that on July 2, a Friday, the entity, which is on a five-day workweek and pays
employees weekly, paid its regular salaried employees P192,000.
c. On June 29, the entity completed negotiations and signed a contract to provide services to a
new client at an annual rate of P36,000.
d. The Supplies account showed a beginning balance of P16,150 and purchases during the year
of P37,660. The year-end inventory revealed supplies on hand of P11,860.
e. The Prepaid Insurance account showed the following entries on June 30:

Beginning Balance P15,300

January 1 29,000
May 1 33,660
The beginning balance represents the unexpired portion of a one-year policy purchased in
April of the previous year. The January 1 entry represented a new one-year policy, and the
May 1 entry is the additional coverage of a three-year policy.
f. The following table contains the cost, scrap value (salvage value), and estimated life of
buildings and equipment, all of which were purchased before the current year:

Account Cost Scrap Value Life

Buildings P1,850,000 P250,000 40 years
Equipment 2,180,000 180,000 10 years
In addition, the firm has furniture costing P400,000 acquired on February 1, 2019, with a
salvage value of P 50,000 and an estimated life of 5 years.
g. On June 1, the entity completed negotiations with another client and accepted an advance
of P210,000 for services to be performed in the next year. The P210,000 was credited to
Unearned Service Revenue.
h. The entity calculated that as at June 30, it had earned P35,000 on a P75,000 contract that
will be completed and billed in August.