The Trial Balance of PEDRO JOSE Advertising Agency before adjustments are shown

below:

PEDRO JOSE ADVERTISING AGENCY

Trial Balance
October 31, 2020

ACCOUNT TITLES DEBIT CREDIT

Cash P 260,000
Accounts receivable 28,800
Prepaid rent 70,000
Prepaid insurance 50,000
Office supplies 19,200
Office equipment 96,000
Accumulated depreciation P 14,000
Notes payable 30,000
Accounts payable 120,000
Salaries payable 30,000
Interest payable 2,000
PJ Capital 200,000
PJ Drawing 32,000
Commission revenue 160,000
Total P 556,000 P 556,000

INSTRUCTIONS:
1. Make a worksheet.
2. Adjustment data on October 31, 2020, the end of the month:
(a) the uncollectible account is 5% of accounts receivable
(b) Prepaid rent is for six months beginning September 1.
(c) Expired insurance, P 36,000.
(d) Unearned commission, P 8,000.
(e) Unpaid salaries, P 24,000.
3. Make an Income Statement, Capital Statement, and Balance Sheet.

1). Worksheet(see the attached file for a 10 column worksheet)

Adjusting entries
a). To adjust for Allowance for uncollectible account(5% x 28,800=1,440)
Debit(Increase),Bad debts Expense by 1,440 and Credit(Decrease), Allowance for
uncollectible accounts by 1,440
b). To record expired Rent; Expired Rent=70,000/6 x 2 months=23,333; 2 months from
September 1 to October 31
Debit(Increase),Rent Expense by 23,333 and Credit(Decrease), Prepaid Rent by 23,333
c). To record expired insurance
Debit(Increase),Insurance Expense by 36,000 and Credit(Decrease), Prepaid Insurance by
36,000
d). To adjust for the Unearned commission
Debit(Increase), Unearned commission by 8,000 and Credit(Decrease), Commission
revenue by 8,000
e). To record Unpaid salaries
Debit(Increase),Salaries Expense by 24,000 and Credit(Decrease), Salaries Payable by
24,000
3). Income Statement, Capital Statement, and Balance Sheet (see the attached file)