Entity A started operations on January 1, 20x1. A summary of the transactions during the year is provided below: 1. The owner invested ₱2,000,000 to the business. 2. Acquired equipment for ₱1,000,000 cash. 3. Obtained a 12%, one-year, bank loan of ₱500,000. 4. Paid one-year insurance amounting to ₱160,000 on September 30, 20x1. Entity A uses the “asset method” in recording prepayments.
Entity A started operations on January 1, 20x1. A summary of the transactions during the year is provided below:
1. The owner invested ₱2,000,000 to the business.
2. Acquired equipment for ₱1,000,000 cash.
3. Obtained a 12%, one-year, bank loan of ₱500,000.
4. Paid one-year insurance amounting to ₱160,000 on September 30, 20x1. Entity A uses the “asset
method” in recording prepayments.
5. Total service fees earned amounted to ₱6,000,000, one-third of which was on cash basis.
6. Collected ₱1,800,000 accounts receivable.
7. Total salaries expense paid amounted to ₱1,200,000.
8. Total utilities expense paid amounted ₱500,000.
9. Total supplies purchased on cash basis amounted to ₱120,000.
10. Total owner’s drawings amounted to ₱1,400,000.
Information for
i. The equipment was acquired on January 1, 20x1 and was estimated to have a useful life of 10 years.
ii. The loan was obtained on July 1, 20x1. Principal and interest are due at maturity date.
iii. The one-year insurance covers the period October 1, 20x1 to September 30, 20x2.
iv. Unused supplies at the end of the year amounted to ₱40,000.
Requirements:
a. Prepare the adjusting entries (see additional information above)
b. Complete the worksheet.
c. Prepare the closing entries.
d.Prepare the balance sheet and income statement
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
