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. Requirements: a. Provide the journal entries for the transactions. b. Post the entries to the ledger using T-accounts. c. Prepare the unadjusted trial balance using a worksheet. d. Prepare the adjusting entries (see additional information below). Information for adjusting entries: 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. e. Complete the worksheet. f. Prepare the closing entries. Prepare the balance sheet and income statement.
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.
Requirements:
a. Provide the
b.
c. Prepare the unadjusted
d. Prepare the
Information for adjusting entries:
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.
e. Complete the worksheet.
f. Prepare the closing entries.
Prepare the balance sheet and income statement.
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