Reference no: EM132752491
Problem 1: The data listed below were obtained from an analysis of the accounts of Mandaluyong Company as of March 31, 2016, in preparation of the annual report. Mandaluyong records current transactions in nominal accounts and does not reverse adjusting entries. What are the appropriate adjusting entries?
a. Prepaid insurance has a balance of P564,000. Mandaluyong has the following policies in force:
Policy Date Terms Cost Coverage
X1 01/01/16 2 years P144,000 Shop equipment
Y2 12/01/15 6 months 72,000 Delivery equipment
Z3 07/01/15 3 years 480,000 Buildings
b. Unearned Subscription Revenues has a balance of P225,000. The following subscriptions were collected in the current year. There are no other unexpired subscriptions.
Effective Date Amount Term
July 1, 2015 P108,000 1 year
October 1, 2015 88,800 1 year
January 1, 2016 115,200 1 year
April 1, 2020 82,800 1 year
c. Mandaluyong owes a 10%, 90-day note for P1,800,000 dated February 1, 2016.
d. Supplies has a balance of P12,160. An inventory of supplies revealed a total of P7,640
e. Salaries Payable has a balance of P39,000. The payroll for the 5-day workweek ended April 3, totaled P45,000.
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