Cesar Mahusay operates an accounting firm.

Shown below are selected accounts that

appear in the Preliminary Trial Balance as of Dec. 31, 2018, and require adjustment.
 

ACCOUNTS RECEIVABLE P 22,500

ALLOWANCE FOR
  1,200
IMPAIRMENT LOSS

NOTES RECEIVABLE   20,000

OFFICE EQUIPMENT   92,000

ACCUMULATED
  4,500
DEPRECIATION

RENTAL INCOME   12,000

SERVICE INCOME    450,000

SUPPLIES EXPENSE     6,250

INSURANCE EXPENSE     7,200

SALARIES EXPENSE     120,000

     

The following adjustments are to be made:

1. Unused office supplies at the end, P 320

2. One year insurance was paid on April 1 of the current year
3. Office equipment has a useful life of 10 years with a salvage value of P 2,000.
It was acquired in July 2018.
4. Unearned rental income is 1/3 of the amount collected
5. Service income not yet collected P 3,000
6. The 60 days 6% note was received on Dec.1
7. Estimated Bad Debts is 10 % of the Accounts Receivable
8. Accrued salaries P 12,000.

Instruction:
Prepare the necessary adjusting entries to arrive at the adjusted balances for the
accounts.
Use these adjusted balances in answering the questions.
You have 30 minutes to work on the adjustments and 10 minutes to answer the
questions.