CASE PROBLEM 2

SET 1

2.1 SMA company borrowed P100,000.00 on December 1 by signing a six month note that
specifies interest at an annual percentage rate( APR ) of 12%. No interest on principal payment is due
until the note matures on May 31, SMA company prepares financial statements at the end of each
calendar month, provide an answer for the month end of January only.

2.2 On December 1, JEM paid its insurance agent P 2,400.00 for the annual insurance premium covering
the twelve month period beginning on December 1. The P 2,400.00 payment was recorded on
December 1 with a debit to the current asset prepaid insurance and a credit to the current asset Cash.
JEM Company prepares monthly financial statements at the end of each calendar month. Provide an
answer for the month end of March Only.

2.3 On December 1, CLM began operations, On December 4, it purchases P1,500.00 of supplies and
recorded the transaction with a debit to the income statement account supplies expense And a credit to
the liability Accounts Payable. CLM prepares monthly financial statements at the end of each calendar
month. At the end of the day on December 31, SOX Company estimated that P700.00 of the supplies
were still on hand in the supply room.

Requirements: Answer the questions pertaining to the adjusting entries for each the three cases. Use
the answer sheet provided for CASE2 set 1

What is the adjusting entry Case 2.1 Case 2.2 Case 2.3
Date of the Adjusting entry January 31 March 31 December 31

Debit account title

Credit account title

Debit & credit Amount