1. **State the problem:** Prepare the year-end adjustments for Illy Abella Surveyors based on the trial balance and additional information. 2. **Adjust prepaid advertising:** Prepaid advertising of P360,000 was for 18 months starting Nov 1, 2020. Monthly expense = $$\frac{360,000}{18} = 20,000$$ From Nov 1, 2020 to May 31, 2021 is 7 months. Advertising expense for 7 months = $$20,000 \times 7 = 140,000$$ Remaining prepaid advertising = $$360,000 - 140,000 = 220,000$$ 3. **Adjust engineering supplies:** Initial supplies = P270,000 Counted supplies at year-end = P90,000 Used supplies = $$270,000 - 90,000 = 180,000$$ 4. **Depreciation on survey equipment:** Depreciation expense = P160,000 Accumulated depreciation increases by P160,000 5. **Unearned survey revenues:** Unearned revenue = P120,000 One-third earned = $$\frac{1}{3} \times 120,000 = 40,000$$ Unearned revenue after adjustment = $$120,000 - 40,000 = 80,000$$ 6. **Accrued salaries:** Salaries accrued = P140,000 Increase salaries expense and salaries payable 7. **Accrued interest on notes payable:** Interest accrued = P60,000 Increase interest expense and interest payable **Summary of adjustments:** - Advertising Expense: Debit 140,000; Prepaid Advertising: Credit 140,000 - Supplies Expense: Debit 180,000; Engineering Supplies: Credit 180,000 - Depreciation Expense: Debit 160,000; Accumulated Depreciation: Credit 160,000 - Unearned Revenue: Debit 40,000; Survey Revenue: Credit 40,000 - Salaries Expense: Debit 140,000; Salaries Payable: Credit 140,000 - Interest Expense: Debit 60,000; Interest Payable: Credit 60,000 These adjustments update the worksheet to reflect accurate financial position and performance at year-end.