Problem 1.

Before adjustments were made by the company, the general ledger showed the following balances for
NESFRUTA BUKO WHY NOT Corporation, a beverage producing company owned by Inday Tagabanwa,
for its operation for the year 2017:

Cash…………………………………………………………………………………………………… P 2,630,000
Accounts Receivable………………………………………………………………………….. 12,460,000
Allowance for Doubtful Accounts………………………………………………………. 530,000
Notes Receivable……………………………………………………………………………….. 3,500,000
Merchandise Inventory, Jan 1, 2017…………………………………………………… 11,260,000
Prepaid Insurance…………………………………………………………………………….... 120,000
Land…………………………………………………………………………………………………… 5,000,000
Building……………………………………………………………………………………………… 15,000,000
Accumulated Depreciation – Building……………………………………………….. 1,800,000
Furniture and Fixtures………………………………………………………………………. 1,250,000
Accumulated Depreciation-Furniture and Fixtures………..………………….. 750,000
Accounts Payable……………………………………………………………………………… 4,630,000
Notes Payable…………………………………………………………………………………… 900,000
Mortgage Payable…………………………………………………………………………….. 5,000,000
Tagabanwa, Capital………………………………………………………………………….. 37,060,000
Sales………………………………………………………………………………………………… 40,260,000
Sales Return and Allowances…………………………………………………………… 860,000
Sales Discounts………………………………………………………………………………… 430,000
Purchases…………………………………………………………………………………………. 32,470,000
Purchase Returns and Allowances……………………………………………………. 330,000
Purchase Discount……………………………………………………………………………. 600,000
Freight-In…………………………………………………………………………………………. 760,000
Sales Salaries Expense……………………………………………………………………… 3,200,000
Advertising Expense………………………………………………………………………… 740,000
Office Salaries Expense……………………………………………………………………. 1,600,000
Heat, Light, Water…………………………………………………………………………… 420,000
Postage, Telephone and Telegraph…………………………………………………. 130,000
Miscellaneous Office Expenses……………………………………………………….. 140,000
Interest Revenue…………………………………………………………………………….. 140,000
Interest Expense……………………………………………………………………………… 30,000

Data for the adjustments:

1.) Estimated Doubtful Accounts is ½ of 1% of net sales.
2.) Annual depreciation rates: Building 2%; furniture and fixtures 10%
3.) Insurance expired for 2011 P40,000
4.) Interest of 6% is payable every Jan 1 on the mortgage payable.
5.) Accrued sales salaries on 12-31,2017 – P150,000
6.) Prepaid Advertising on 12-31-2017 P340,000
7.) Office Supplies bought on 2011 were charged to Miscellaneous Office Expenses. On 12-31-
2017, unused office supplies were P50,000
8.) Accrued Interest on Notes Receivable @ 12-31-2017 is P30,000
9.) Merchandise inventory per physical count at year-end is P12,900,000
Required:
1.) Adjusting Entries in the journal
2.) 12-column worksheet
3.) Statement of Financial Position
4.) Income Statement
5.) Statement of Changes in Owner’s Equity
6.) Closing Entries