ADJUSTING ENTRIES

Problem $1.$ Prepare adjusting journal entries for RM Corporation as of

December $31,2021.$ Below are the following information.

$1.$ Supplies account had a beginning balance of P$19,000$ and the same

account has an ending balance of P $41,000.$ Supplies acquired during the

year amounted to P$75,000.$

$2.$ Office equipment was acquired on May $1$ of the current year at a cost of

P$750,000.$ It has a salvage value of P$30,000$ and useful life of $10$ years.

$3.$ On November $17,2021$ the company borrowed P$200,000$ from SBC by

issuing a $15\%$ one$-$ year note.

$4.$ The Prepaid Insurance account has a balance of P$120,000$ as of yearend.

The balance represented two insurance policies acquired during the year

as follows: Policy I for P$70,000$ dated March $1,2021$ and Policy II was

purchased on September $30,2021$ for P$50,000$;

$5.$ The balance of Painting Supplies at year$-$end is P$22,000$ of which P$9,000$

is unused.

$6.$ Notes Receivable has a balance of P$60,000$ which is a $120$ day $15\%$ note

received on October $21,2021.$

$7.$ Salaries Expense per ledger is P$240,000$ of which P $22,500$ is paid in

advance.

$8.$ RM Corporation signed a lease contract with Suga Rentals on May $1,$

$2021$ for rental of office space for the next $12$ months for P$120,000.$ A

second lease was signed on July $31$ of the same year for pantry space for

$8$ months for P $60,000$ both paid in advance.

$9.$ Advertising contract is recorded at P$80,000$ as Advertising expense. This

is a $12-$month contract signed April $1,2021.$

$10.$ Income Collected in Advance has a balance of P$150,000$ of which $60\%$

has been earned.

$11.$ Interest Revenue of P$5,000$ is recorded of which P$2,000$ is actually

earned. Interest expense of P$3,000$ is recorded $,$ of this P$1,000$ is paid in

advance.

Problem $2.$ Prepare adjusting journal entries for Hobi Company as of

December $31,2021.$ Below are the following information.

$1.$ Advertising Expense shows a balance of P$48,000,$ paid on June $30,2021$

and the contract is for $10$ months.

$2.$ Prepaid Insurance has a balance of P$120,000$ per ledger. P$50,000$ is

expired.

$3.$ Delivery van was acquired on September $30,2020$ at a cost of

P$30,000,000$ with a residual value of P$80,000$ and service life of $30$ years.

$4.$ Gardening supplies has a balance per ledger of P$25,000.$ Of this P$14,000$

was used.

$5.$ Loans Payable was issued on October $24,2021$ for P$130,000$ at $20\%$ for

ten months. No interest has been accrued on this loan.

$6.$ Taxes balance per ledger is P$12,000$ of which P$2,500$ applies to the year

$2022.$

$7.$ Computer has a balance of P$200,000$ purchased on June $1,2021$ with life

of $5$ years and scrap value of P$30,000.$

$8.$ Notes Receivable was received on August $1,2021$ in the amount of

P$80,000$ at $14\%$ per annum. No interest has been accrued on the note.

$9.$ Furniture has a ledger balance of P$180,000$ as of December $31,2021.$

Additional furniture were acquired on March $31,2021$ in the amount of

P$30,000.$ Furniture are depreciated at $10\%$ per year.

$10.$ Rent Expense has a balance of P$112,000$ paid on May $30,2021.$ Contract

on the rent is for $16$ months.

$11.$ Unpaid licenses as of year$-$end, P$18,000.$

$12.$ Accounts Receivable has a balance of P$500,000$ and Allowance for

Doubtful Accounts is P$40,000.$ It is estimated that $10\%$ of Accounts

Receivable is considered uncollectible.