Problem 2: Prepare the necessary adjusting entries on December 31, 2020 to adjust the given items below. The following information relates to Joy Catering Services for the calendar year ending December 31, 2020. 1. On December 25, 2020, Joy catering received P100,000 in an agreement to serve foods for the 50 participants on a ten-day seminar starting December 26 up to January 4, 2021. 2. A seven-day (weekly payroll) of P7,000 paid every Friday. December 31 falls on Sunday so the employees will only be paid on January 5, 2021. 3. The enterprise paid P34,000 insurance premium on April 1, 2020 covering one year up to March 31, 2021. This was recorded by a debit to prepaid insurance and credit to cash. 4. On January 2, 2020, when the business was started, the owner bought equipment at a cost of P200,000. The equipment was estimated to last for 10 years with an estimated scrap value of P20,000 at the end of its life. 5. On October 4, 2020, Joy received P50,000 12% note receivable from a customer. The note was dated October 1, 2020 and will mature in ten months. 6. As of December 31, 2020, Joy estimated that P8,000 accounts receivable becomes uncollectible, hence requiring adjustments. 7. The unused office supplies account showed a P12,000 debit balance as of December 31, 2020. A count however, showed P2,400 of unused supplies.
Problem 2: Prepare the necessary adjusting entries on December 31, 2020 to adjust the given items below. The following information relates to Joy Catering Services for the calendar year ending December 31, 2020. 1. On December 25, 2020, Joy catering received P100,000 in an agreement to serve foods for the 50 participants on a ten-day seminar starting December 26 up to January 4, 2021. 2. A seven-day (weekly payroll) of P7,000 paid every Friday. December 31 falls on Sunday so the employees will only be paid on January 5, 2021. 3. The enterprise paid P34,000 insurance premium on April 1, 2020 covering one year up to March 31, 2021. This was recorded by a debit to prepaid insurance and credit to cash. 4. On January 2, 2020, when the business was started, the owner bought equipment at a cost of P200,000. The equipment was estimated to last for 10 years with an estimated scrap value of P20,000 at the end of its life. 5. On October 4, 2020, Joy received P50,000 12% note receivable from a customer. The note was dated October 1, 2020 and will mature in ten months. 6. As of December 31, 2020, Joy estimated that P8,000 accounts receivable becomes uncollectible, hence requiring adjustments. 7. The unused office supplies account showed a P12,000 debit balance as of December 31, 2020. A count however, showed P2,400 of unused supplies.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
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Transcribed Image Text:Problem 2:
Prepare the necessary adjusting entries on December 31, 2020 to adjust the given items below.
The following information relates to Joy Catering Services for the calendar year ending
December 31, 2020.
1. On December 25, 2020, Joy catering received P100,000 in an agreement to serve foods
for the 50 participants on a ten-day seminar starting December 26 up to January 4,
2021.
2. A seven-day (weekly payroll) of P7,000 paid every Friday. December 31 falls on Sunday
so the employees will only be paid on January 5, 2021.
3. The enterprise paid P34,000 insurance premium on April 1, 2020 covering one year up
to March 31, 2021. This was recorded by a debit to prepaid insurance and credit to cash.
4. On January 2, 2020, when the business was started, the owner bought equipment at a
cost of P200,000. The equipment was estimated to last for 10 years with an estimated
scrap value of P20,000 at the end of its life.
5. On October 4, 2020, Joy received P50,000 12% note receivable from a customer. The
note was dated October 1, 2020 and will mature in ten months.
6. As of December 31, 2020, Joy estimated that P8,000 accounts receivable becomes
uncollectible, hence requiring adjustments.
7. The unused office supplies account showed a P12,000 debit balance as of December 31,
2020. A count however, showed P2,400 of unused supplies.
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