I Adjusted Journal Entries

Particulars 1 Accounts Receivable Service Income 2 Supplies Expense Janitorial Supplies 3 Insurance Expense Prepaid Insurance 4 Miscellaneous Expense Accounts Payable 5 Interest Expense Interest Payable 6 Depreciation Expense- Cleaning E Accumulated Depreciation Depreciation Expense- Trucks Accumulated Depreciation 5000 5000 2000 2000 1250 1250 500 500 1600 1600 2700 2700 Dr 3700 3700 Cr

II. Generally Accepted Principles 1. Accrued Income Principle - states that income is recognized when service is rendered regardless cash has not yet been received. 2. Expense Recognition Principle - states that expense is incurred the moment service is rendered 3. Expense Recognition Principle - states that expense is incurred the moment service is rendered 4. Expense Recognition Principle - states that expense is incurred the moment service is rendered 5. Expense Recognition Principle - states that expense is incurred the moment service is rendered 6. Expense Recognition Principle - states that expense is incurred the moment service is rendered

III. Balance Sheet

WHITEGLOVES JANITORIAL SERVICE Statement of Financial Position December 31,2012 ASSETS Current Assets Cash Accounts Receivable Janitorial Supplies Prepaid Insurance Total Current Assets Property Plant and Equipment Cleaning Equipment Delivery Trucks Total property, plant and equipment TOTAL ASSETS LIABILITIES AND OWNER'S EQUITY Current Liabilities Notes Payable Accounts payable Interest Payable Total Current Liabilities Long term Liabilities Notes Payable Total Liabilities Owner's Equity Nancy Kohl, Capital TOTAL LIABILITIES AND OWNER'S EQUITY 54000 P73900 15000 P27500 P10000 3000 1250 P14250 P20000 29000 P49000 P73900 P6500 12700 2500 3200 P24900

IV. Were the terms of the bank loan met? Explain.

The terms of the bank loan were met because the term of the loan required the borrower to have 10,000 more current Assets than Liabilities. After adjusting the Statement of Financial Position, the total assets summed a total of 24,900 while total liabilities summed a total of 14,250. The difference of the total assets and liabilities is 10,650, higher than the required balance of 10,000.

V. Introduction Nancy Kohl started her own Janitorial Services about two years ago. With her business running the way she wanted it to, she decided to expand her business operations. Nancy acquired an additional truck and hired two more staff members to her business venture. Upon her acquisitions, Nancy decided to obtain a bank loan on July 1, 2012 for 25,000 pesos at 10 percent per year and to be paid an amount of 100,000 pesos on July 1, 2013, and the balance on July 1, 2014. The loan terms require for Nancy to have a 10,000 pesos more current assets than current liabilities by the end December 31, 2012. If she does not fulfill the terms of the loan, the bank loan will have an interest rate of 15 percent instead of 10 percent.

VI. Report After the necessary journal entries have been made, I had to make changes to the Statement of Financial Position of Nancy's Janitorial Services. The changes are as follows:

3,700 worth of janitorial services were not recorded when service was rendered Janitorial Supplies were overstated by 2,700 since it said that Nancy only had 2,500 supplies on hand

Prepaid Insurance was overstated by 1,600 pesos Interest Expense of 1,250 pesos was not recorded at the accounting period

Deducted 2,000 pesos worth of Depreciation to the Cleaning Equipment and 5,000 pesos worth of Depreciation to the Delivery trucks.

VII. Recommendations As a business owner, Nancy should consult a Certified Public Accountant regarding the presentation of her financial statements to ensure that everything has been adjusted and Nancy, the external and internal users are getting the correct data of her business.

WHITEGLOVES JANITORIAL SERVICE A business case presented to the Accountancy Department In partial fulfillment of the course requirements in ACTBAS1 dos Remdedios, Carlo Miguel M. C33 December 9, 2012