Below is the Trial Balance of Monica Banaag Clearners:

Monica Banaag Cleaners

Trial Balance
Sept. 30, 2019
Cash P 117,880
Accounts Receivable 264,940
Prepaid Insurance 34,000
Cleaning Supplies 73,740
Land 180,000
Building 1,850,000
Accumulated Depreciation-Building P 456,000
Accounts Payable 204,000
Unearned Cleaning Revenues 16,000
Mortgage Payable 1,100,000
Banaag, Capital 565,600
Banaag, Withdrawals 100,000
Cleaning Revenues 1,576,340
Salaries  Expense 1,013,300
Cleaning Equipment Rental Expense 60,000
Delivery Truck Rental Expense 43,740
Utilities Expense 70,340
Interest Expense 110,000
P 3,917,940 P 3,917,940

  The following information is also available:                      

1. A review of insurance policies showed that P6,800 is unexpired at the year-end.

2. An inventory of cleaning supplies showed P12,440 on hand.
3. Estimated depreciation on the building for the year is P128,000.
4. Accrued interest on the mortgage payable is P10,000.
5. On Sept. 1, the entity signed a contract, effective immediately with Bacolod Doctor’s
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’ services in advance.
6. 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.
Required:
For each of the above situations, show the accounts affected, the amount of the adjustment,
and the balance of the accounts after the adjustment. Prepare a trial balance.
JOURNAL ENTRY

A. You need transfer the difference between your Prepaid Insurance account balance and the amount
that is unexpired at year-end to Insurance Expense.

1 Insurance Expense (OE:E)   27,200  

  Prepaid Insurance (A)     27,200

B. You need to transfer the difference between your Cleaning Supplies account balance and the actual
inventory amount of cleaning supplies to Cleaning Supplies Expense.

2 Cleaning Supplies Expense (OE:E)   61,300  

  Cleaning Supplies (A)     61,300

C. This amount is your Depreciation Expense and Accumulated Depreciation for the year.

3 Depreciation Expense-Building (OE:E)   128,000  

  Accumulated Depreciation-Building (A)     128,000

D. This is your Interest Payable and Interest Expense for the year. This is interest that is owed but not yet
paid. So it is a liability (payable).

4 Interest Payable (L)   10,000  

  Interest Expense (OE:E)     10,000

E. You need to calculate 4 months of charges (4 * 4,000), This is cash received and is Unearned Revenue.

5 Unearned Cleaning Revenues (L)   4,000  

  Cleaning Revenues (OW:I)     4,000

F. First you need to calculate 4 days of salaries (25,200 * 4/6). This amount is Salaries Expense and
Salaries Payable.

6 Salaries Expense (OE:E)   16,800  

  Salaries Payable (L)     16,800
 Monica Banaag Cleaners
Adjustment Entry
Sept. 30, 2019
DATE Account Titles and Explanation Ref Amount
Sept 31 2019. Debit Credit
1 Insurance Expense (OE:E) 27,200
Prepaid Insurance (A) 27,200

2 Cleaning Supplies Expense (OE:E) 61,300

Cleaning Supplies (A) 61,300

3 Depreciation Expense-Building (OE:E) 128,000

Accumulated Depreciation-Building (A) 128,000

4 Interest Payable (L) 10,000

Interest Expense (OE:E) 10,000

5 Unearned Cleaning Revenues (L) 4,000

Cleaning Revenues (OW:I) 4,000

6 Salaries Expense (OE:E) 16,800

Salaries Payable (L) 16,800
 Monica Banaag Cleaners
Preparation of Adjusted Trial Balance
Sept. 30, 2019
Chart of Accounts Trial Balance Adjustments Adj. Trial Balance
Dr Cr Dr Cr Dr Cr
Cash 117,880 117,880
Accounts Receivable 264,940 264,940
Prepaid Insurance 34,000 ((1)) 27,200 6,800
Cleaning Supplies 73,740 ((2)) 61,300 12,440
Land 180,000 180,000
Building 1,850,000 1,850,000
Accumulated Depreciation-Building 456,000 ((3)) 128,000 584,000
Accounts Payable 204,000 204,000
Unearned Cleaning Revenues 16,000 ( (5)) 4,000 12,000
Mortgage Payable 1,100,000 1,100,000
Banaag, Capital 565,600 565,600
Banaag, Withdrawals 100,000 100,000
Cleaning Revenues 1,576,340 ((5)) 4,000 1,580,340
Salaries  Expense 1,013,300 ( (6)) 16,800 1,030,100
Cleaning Equipment Rental Expense 60,000 60,000
Delivery Truck Rental Expense 43,740 43,740
Utilities Expense 70,340 70,340
Interest Expense 110,000 ( (4)) 10,000 120,000

Adjus tment:
Insurance Expense ( (1)) 27,200 27,200
Cleaning Supplies Expense ( (2)) 61,300 61,300
Depreciation Expense-Building ( (3)) 128,000 128,000
Interest Expense ((4)) 10,000 10,000
Unearned Cleaning Revenues
Salaries Payable ((6)) 16,800 16,800
Total 3,917,940 3,917,940 247,300 247,300 4,072,740 4,072,740