BEFORE ADJUSTMENTS

DR
Cash 288,800
Commissions Receivable
Prepaid rent 120,000
Office supplies 19,200
Office Equipment 36,000
Accumulated Deprn
Notes Payable
Accounts Payable
Salaries Payable
Interest Payable
Unearned Commissions
Valdez, Capital
Valdez, Drawings 32,000
Commissions Income
Salary expense 60,000
Rent Expense
Office supplies expense
Depreciation Expense
Interest Expense
TOTAL 556,000
Net Income
 AFTER ADJUSTMENTS INCOME STATEMENT
CR DR CR DR CR
288,000
7,200
84,000
12,600
36,000
14,000 16,400
30,000 30,000
120,000 120,000
4,800
1,200
32,000 24,000
200,000 200,000
32,000
160,000 175,200 175,200
64,800 64,800
36,000 36,000
6,600 6,600
2,400 2,400
1,200 1,200
556,000 571,600 571,600 111,000 175,200
64,200
175,200 175,200
BALANCE SHEET
DR CR
288,000
7,200
84,000
12,600
36,000
16,400
30,000
120,000
4,800
1,200
24,000
200,000
32,000

459,800 396400
63,400
459,800 459800
 BEFORE ADJUSTMENTS
DR CR
Cash 288,800
Commissions Receivable
Prepaid rent 120,000
Office supplies 19,200
Office Equipment 36,000
Accumulated Deprn 14,000
Notes Payable 30,000
Accounts Payable 120,000
Salaries Payable
Interest Payable
Unearned Commissions 32,000
Valdez, Capital 200,000
Valdez, Drawings 32,000
Commissions Income 160,000
Salary expense 60,000
Rent Expense
Office supplies expense
Depreciation Expense
Interest Expense
TOTAL 556,000 556,000
AFTER ADJUSTMENTS
DR CR
288,000
7,200 Commissions Receivable
84,000 Commissions Income
12,600 Unearned Commissions
36,000 Commissions Income
16,400 Rent Expense
30,000 Prepaid Rent
120,000
4,800 Office supplies expense
1,200 Office supplies
24,000
200,000 Salaries expense
32,000 Salary payable
175,200
64,800 Depreciation Expense
36,000 Accumulated Depreciation
6,600
2,400 Interest Expense
1,200 Interest Payable
571,600 571,600
 7,200 Commissions Receivable
7,200 Commissions Income
8,000
8,000
36,000 Rent Expense
36,000 Prepaid Rent

6,600 Office supplies

6,600 Office supplies expense

4,800 Salaries Expense

4,800 Salary Payable

2,400 Depreciation Expense

2,400 Accumulated Deprn

1,200 Interest Expense

1,200 Interest Payable
175,200
175,200 Commission Income
Income Summary

36,000 INCOME SUMMARY

36,000 RENT
SALARIES
6,600 INTEREST
6,600 SUPPLIES
DEPRECIATION
64,800
64,800 INCOME SUMMARY
MARGALLO , CAPITAL
2,400
2,400 MARGALLO, CAPITAL
MARGALLO, DRAWINGS
1,200
1,200
175,200
175,200

111,000
36,000
64,800
1,200
6,600
2,400

64,200
64,200

32,000
32,000
a. On Sept. 1, DEF borrowed P2,000,000 cash from the Bank of the Phil. By issuing a 6
b. On Feb. 1, DEF paid insurance premium of P72,000 covering a period of 3 years beg
c. On Dec. 1, DEF paid P360,000 representing rental for one year starting on this date
d. DEF reports accounts receivable of P1,500,000 and allowance for uncollectible acco
e. DEF pays all employees every Friday. The total payroll for the five-day work week e
f. DEF purchased office equipment on Aug. 1, 2019 amounting to P120,000. On Jan 1
g. Office supplies on hand on January 1, 2019 amounted to P5,000. During the year, o
h. DEF subleases part of its office space for P30,000 a month. On Nov. 1, it received r
I. Merchandise Inventory on January 1 and December 31 amounted to P180,000 and
REQUIRED: PREPARE THE ADJUSTING ENTRIES ON DECEMBER 31, 2019
PREPARE THE REVERSING ENTRIES AS OF JANUARY 1, 2020

AJE
A. Interest Expense 40,333.33
Interest Payable
2,000,000 x 6% x 121/360
B. Prepaid Insurance 33,000
Innsurance Expense
72,000 x 25/36
C. Prepaid Rent 330,000
Rent Expense
D. Uncollectible Accounts Expense 40,000
Allowance for Uncollectible Accounts
E. Salaries Expense 180,000
Salaries Payable
450,000 x 2/5
F. Depreciation Expense 120,000
Accumulated Depreciation
480,000 + 120,000 / 5
G. Supplies 4,500
Supplies Expense
H. Rent Income 120,000
Unearned Rent Income
I. Merchandise Inventory 220,000
Income Summary

RE
A. Interest Payable 40,333.33
 Interest Expense
2,000,000 x 6% x 121/360
B. Insurance Expense 33,000
Prepaid Insurance
72,000 x 11/24
C. Rent Expense 330,000
Prepaid Rent
D. Allowance for Uncollectible Accounts 40,000
Uncollectible Accounts Expense
E. Salaries Payable 180,000
Salaries Expense
450,000 x 2/5
F. Accumulated Depreciation 120,000
Depreciation Expense
480,000 + 120,000 / 5
G. Supplies Expense 4,500
Supplies
H. Unearned Rent Income 60,000
Rent Income
I. Merchandise Inventory 400,000
Income Summary
 nk of the Phil. By issuing a 6% note payable in one year. The interest is payable upon maturity of the note.
ering a period of 3 years beginning on this date.
ne year starting on this date.
wance for uncollectible accounts of P10,000 (debit balance): P50,000 of the receivables are uncollectible.
or the five-day work week ending January 3, 2020 is P450,000.
nting to P120,000. On Jan 1, 2019, the office equipment account has a balance of P480,000. All equipment have estimated useful life of 5
o P5,000. During the year, office supplies of P12,500 were purchased. On December 31, 2019 there are unused supplies of P4,500.
nth. On Nov. 1, it received rental payments for six months starting on this date.
amounted to P180,000 and P220,000 respectively.

40,000 d.
40,333.33 40,000 Accounts receivable 1,500,000
Allowance for uncollectible accounts 10,000 debit
50,000
33,000 50,000 Estimated uncollectible accounts amounted to 50,000

Required allowance balance 50,000

330,000 Allowance balance before adjustment 10,000
60,000 10k + 50k Uncollectible accounts expense for period 40,000
40,000 60,000

180,000

106,000
120,000 106,000

4,500

120,000

220,000
40,333.33

33,000

330,000

40,000

180,000

120,000

4,500

60,000

400,000
 estimated useful life of 5 years with no residual value.
supplies of P4,500.