Reference no: EM132979211

Question -

Part 1 - For each of the following items, write the journal entry first (if one is needed) to record the transactions; and then the adjusting entry, if any is required, for the end of the accounting period of Car Ryle Company on December 31, 2018.

1. On Nov 1, Ryle borrowed P 300,000 cash from China Bank by issuing a promissory note with an interest of 12% per annum. Both the principal and the interest is payable after one year, that is October 31, 2019.

2. On Dec 28, Ryle received the MERALCO bill for the month of December amounting to P2,000. Ryle will pay this bill on its due date - January 7 2019.

3. Car Ryle Company has 10 employees that are paid on biweekly basis (every two weeks). The total payroll amount every month is P 180,000. The two-week pay period ended on January 3, 2019.

4. On Dec 29, Ryle received the Maynilad bill and SKY internet bill for the month of December amounting to P 4,000. Jack will pay this bill on its due date - January 10, 2019.

Part 2 - On September 1, 2020, Lyle Company acquired a 2-year fire insurance policy for 120,000 paid in advance. The company's year-end is November 30, 2020.

a. Prepare the adjusting entry for November 30, 2020 assuming the entity is using ASSET METHOD in recording its prepayments.

b. Prepare the adjusting entry for November 30, 2020 assuming the entity is using EXPENSE METHOD in recording its prepayments.

3. On September 1, 2020, Maayo Consultancy Services received an advanced payment from a client amounting to P 200,000 for management consultancy services good for 1 year. The company's year-end is December 31, 2020. The company uses consultancy revenue to record their revenues.

a. Prepare the adjusting entry for December 31, 2020 assuming the entity is using LIABILITY METHOD in recording its advance consulting fees collections.

b. Prepare the adjusting entry for November 31, 2020 assuming the entity is using INCOME METHOD in recording its advance consulting fees collections.