Reference no: EM132924243

Question - Analyze the given transaction and identify what kind of adjustment is needed.

Use Al if accrued income, AE if accrued expense, Ul if unearned income, PE if prepaid expense, BD if bad debts and DE if depreciation expense.

1. Salaries incurred but unpaid as of December 31, 2020 amounting to P20,000.

2. Acquired an equipment for 1,500,000 on June 30, 2020 with an estimated life of 10 years and a scrap value of P100,000. 3.5% of the P100,000 outstanding accounts receivable should be recognized as doubtful of collection.

4. Rentals paid in advance for P60,000 recorded as prepaid rent was for 5 months starting October 1, 2020.

5. Sublet a building to Mercury drugstore on October 1, 2020 who paid P60,000 rent in advance for four months. The advance collection was recorded as an income.

6. Notes receivable amounting to P60,000 represents a 60-day 12% note received from the customer on December 1, 2020.

Based on the above transactions make adjusting entries assuming the end of the reporting period is December 31, 2020. Show your solutions.