Write your answer in the worksheet. A. State whether each situation is a prepaid expense (PE), unearned revenue (UR), accrued revenue (AR) or an accrued expense (AE). 1. Unrecorded interest on savings is P12,500 2. Property taxes that have been incurred but that have not yet been paid or recorded amount to P3,000 3. Legal fees of P10,000 were collected in advance. By year end 60 percent were still unearned. 4. Prepaid insurance had a P5,000 balance prior to adjustment. By year end, 40 percent was still unexpired. B. Prepare adjusting entries for the following transactions. Omit explanations. 1. Depreciation on equipment is P8,000 for the accounting period. 2. There was no beginning balance of supplies and purchased P5,000 of office supplies during the period. At the end of the period P800 of supplies were on hand. 3. Prepaid rent had a P10,000 normal balance prior to adjustment. By year end P6,000 was unexpired. C. Ellis Company accumulates the following adjustment data at December 31. 1. Revenue of P9,000 collected in advance has been earned. 2. Salaries of P6,000 are unpaid. 3. Prepaid rent totaling P4,500 has expired. 4. Supplies of P5,500 have been used. 5. Revenue earned but unbilled total P7,500. 6. Utility expenses of P2,000 are unpaid. 7. Interest of P2,500 has accrued on a note payable. Instructions (a) For each of the above items indicate: 1. The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense). 2. The account relationship (asset/liability, liability/revenue, etc.). 3. The status of account balances before adjustment (understatement or overstatement). 4. The adjusting entry. (b) Assume net income before the adjustments listed above was P140,500. What is the adjusted net income