Entity A started operations on January 1, 2021. A summary of the transactions during the year is provided below. 1. The owner invested P2,000,000 to the business. 2. Acquired equipment for P1,000,000 cash. 3. Obtained a 12%, one-year, bank loan of P500,000. 4. Paid one-year insurance amounting to P160,000 on September 30, 2021. Entity A uses the "asset method" in recording prepayments. 5. Total service fees earned amounted to P6,000,000, one-third of which was on cash basis. 6. Collected P1,800,000 accounts receivable. 7. Total salaries expense paid amounted to P1,200,000. 8. Total utilities expense paid amounted P500,000. 9. Total supplies purchased on cash basis amounted to P120,000. 10. Total owner's drawings amounted to P1,400,000. Information for adjusting entries: a. The equipment was acquired on January 1, 2021 and was estimated to have a useful life of 10 years. b. The loan was obtained on July 1, 2021. Principal and interest are due at maturity date. c. The one-year insurance covers the period October 1, 2021 to September 30, 2022. d. Unused supplies at the end of the year amounted to P40,000. Requirements: a. Provide the journal entries for the transactions. b. Post the entries to the ledger. c. Prepare the unadjusted trial balance using a worksheet.
Entity A started operations on January 1, 2021. A summary of the transactions during the year is provided below. 1. The owner invested P2,000,000 to the business. 2. Acquired equipment for P1,000,000 cash. 3. Obtained a 12%, one-year, bank loan of P500,000. 4. Paid one-year insurance amounting to P160,000 on September 30, 2021. Entity A uses the "asset method" in recording prepayments. 5. Total service fees earned amounted to P6,000,000, one-third of which was on cash basis. 6. Collected P1,800,000 accounts receivable. 7. Total salaries expense paid amounted to P1,200,000. 8. Total utilities expense paid amounted P500,000. 9. Total supplies purchased on cash basis amounted to P120,000. 10. Total owner's drawings amounted to P1,400,000. Information for adjusting entries: a. The equipment was acquired on January 1, 2021 and was estimated to have a useful life of 10 years. b. The loan was obtained on July 1, 2021. Principal and interest are due at maturity date. c. The one-year insurance covers the period October 1, 2021 to September 30, 2022. d. Unused supplies at the end of the year amounted to P40,000. Requirements: a. Provide the journal entries for the transactions. b. Post the entries to the ledger. c. Prepare the unadjusted trial balance using a worksheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:4G1 4GI 7:20 M S
|17
PROBLEM 1
Refer to the specific instruction in the problem.
Entity A started operations on January 1, 2021. A summary of the transactions during the
year is provided below:
1. The owner invested P2,000,000 to the business.
2. Acquired equipment for P1,000,000 cash.
3. Obtained a 12%, one-year, bank loan of P500,000.
4. Paid one-year insurance amounting to P160,000 on September 30, 2021. Entity A
uses the "asset method" in recording prepayments.
5. Total service fees earned amounted to P6,000,000, one-third of which was on cash
basis.
6. Collected P1,800,000 accounts receivable.
7. Total salaries expense paid amounted to P1,200,000.
8. Total utilities expense paid amounted P500,000.
9. Total supplies purchased on cash basis amounted to P120,000.
10. Total owner's drawings amounted to P1,400,000.
"SISBA
Information for adjusting entries:
a. The equipment was acquired on January 1, 2021 and was estimated to have a
useful life of 10 years.
The loan was obtained on July 1, 2021. Principal and interest are due at maturity
date.
The one-year insurance covers the period October 1, 2021 to September 30, 2022.
d. Unused supplies at the end of the year amounted to P40,000.
с.
Requirements:
a. Provide the journal entries for the transactions.
b. Post the entries to the ledger.
c. Prepare the unadjusted trial balance using a worksheet.
d.
Prepare the adjusting entries (see additional information below).
e. Complete the worksheet.
f. Prepare the closing entries.
g. Prepare the balance sheet and income statement
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