a. A review of insurance policies showed that P6,800 is unexpired at the year-end. b. An inventory of cleaning supplies showed P12,440 on hand. C. Estimated depreciation on the building for the year is P128,000. d. Accrued interest on the mortgage payable is P10,000. e. On Sept. 1, the entity signed a contract, effective immediately, with Davao City Hospital to dry clean, for a fixed monthly charge of P4,000, the uniforms used by doctors in surgery. The hospital paid for four months' service in advance. Salaries are paid on Saturdays. The weekly payroll is P25,200. Assume that Sept. 30 falls on a Thursday and the entity has a six-day pay week.

a. A review of insurance policies showed that P6,800 is unexpired at the year-end. b. An inventory of cleaning supplies showed P12,440 on hand. C. Estimated depreciation on the building for the year is P128,000. d. Accrued interest on the mortgage payable is P10,000. e. On Sept. 1, the entity signed a contract, effective immediately, with Davao City Hospital to dry clean, for a fixed monthly charge of P4,000, the uniforms used by doctors in surgery. The hospital paid for four months' service in advance. Salaries are paid on Saturdays. The weekly payroll is P25,200. Assume that Sept. 30 falls on a Thursday and the entity has a six-day pay week.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On July 1, City Hospital leased equipment from MedTech Instruments for a period of five years. The lease calls for monthly payments of $2,000, payable in advance on the first day of each month, beginning July 1.. Prepare the journal entry needed to record this lease in the accounting records of City Hospital on July 1 under each of the following independent assumptions (a) The lease represents a simple rental arrangement. (b) At the end of five years, title to this equipment will be transferred to City Hospital at no additional cost. The present value of the 60 monthly lease payments is $90,809, of which $2,000 is paid in cash on July 1.
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