The Intermediate Accounting Series Volume 2 2016 Empleo Robles Solman PDF

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Chapter 1 Current Liabilities, Provisions and Contingencies Chapter 1 Current Liabilities, Provisions and Contingencies The following shall result in the recognition of liabilities a, c, e, g, h, i, m, n, o Case 1 None Case 2 Case 3 Case 4 Case 5 (1M x x Case 6 None (a)(1) Gross method Dec. 16 Purch...

Description

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

Chapter(1((*((Current(Liabilities,(Provisions(and(Contingencies( ! 1#1.! ! ! 1#2.! ! ! ! ! ! ! 1#3.! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1#4.! ! ! ! ! ! ! !

The!following!shall!result!in!the!recognition!of!liabilities! a,!c,!e,!g,!h,!i,!m,!n,!o! Case!1!–!None! Case!2!–!P800,000! Case!3!–!P400,000! Case!4!–!P350,000! Case!5!#!P100,000!=!(1M!x!10%)!+!(200,000!x!30%)!–!60,000! Case!6!#!None! (a)(1)! Gross!method! Dec.!16! Purchases! ! ! ! ! Freight!in! ! ! ! ! ! Accounts!payable!–!Intel! !

66,000! !!!1,400! ! 67,400!

!!!!!!!!!19! Purchases! ! ! ! ! ! Accounts!payable!–!Celeron!

72,000! ! 72,000!

!!!!!!!!!26! Accounts!payable!–!Intel! ! ! 67,400! ! ! Purchase!discounts!(66,000!X!2%)! ! !!!1,320! ! ! Cash! ! ! ! ! 66,080! !!!!!!!!!31! Accounts!payable!–!Celeron! ! 72,000! ! ! Purchase!discounts!(72,000!X!2%)! ! !!1,440! ! ! Cash! ! ! ! ! 70,560! (a)(2)! Net!method! Dec.!16! Purchases!(66,000!X!98%)! ! ! ! Freight!in! ! ! ! ! ! Accounts!payable!–!Intel! !

64,680! !!!1,400! ! 66,080!

!!!!!!!!!19! Purchases!(72,000!x!97%)! ! ! ! ! Accounts!payable!–!Celeron!

69,840! ! 69,840!

!!!!!!!!!26! Accounts!payable!–!Intel! ! ! ! Cash! ! !

66,080! ! 66,080!

! !

!!!!!!!!!31! Accounts!payable!–!Celeron! ! ! Purchase!discounts!lost!(72,000!x!1%)! ! ! Cash! ! ! !

69,840! !!!!!!720! ! 70,560!

(b)! Adjusting!entry!at!December!31!under!the!net!method! Dec.!31! Purchase!discounts!lost! ! ! !!!!!!720! ! ! Accounts!payable!–!Celeron! ! !!!!!!720! Reported!amount!of!accounts!payable!at!December!31,!2015! ! P1,000,000! Adjustments:! ! Unrecorded!check!written!and!issued!on!December!27! ! !!!!(350,000)! ! Unrecorded!purchases!received!on!December!28,!net!(150,000!x!98%)!!!!!!147,000! ! Goods!purchased!FOB!shipping!point!still!in!transit!and!not! ! ! yet!recorded!at!year!end! ! ! ! ! !!!!!!120,000! ! Debit!balance!in!a!supplier’s!account!netted!in!the!balance! ! !!!!!!!!!80,000! Correct!amount!of!accounts!payable!at!December!31,!2015!! ! P!!!!997,000!

Page(1(

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

1#5.! ! ! ! ! ! 1#6.!

(a)!

!

2015!

! ! ! ! ! ! !

May!1! Automobile!! ! ! ! 3,600,000! ! Discount!on!notes!payable! ! !!!!324,000! ! ! Notes!payable! ! ! ! ! ! ! ! 3,924,000/1.09!=!3,600,000! Dec.!31! Interest!expense!! ! ! !!!!!216,000! ! ! Discount!on!notes!payable! ! ! ! ! ! 324,000!x!8/12!=!216,000!

! !

! ! ! ! ! ! ! ! ! 1#7.!

Reported!amount!of!accounts!payable!at!December!31,!2015! ! P1,500,000! Adjustments:! ! Goods!purchased!FOB!shipping!point!lost!in!transit! ! !!!!!!240,000! ! Credit!memo!for!goods!returned!to!supplier!not!recorded!at!yearend!!!!!(80,000)! Correct!amount!of!accounts!payable!at!December!31,!2015!! ! P1,660,000!

3,924,000!

!!!!216,000!

2016!

Apr.!1! ! ! ! !

Interest!Expense!! ! ! !!!108,000! Notes!payable! ! ! ! 3,924,000! ! Discount!on!notes!payable! !! !!! ! Cash! ! ! ! ! ! ! ! 324,000!–!216,000!=!108,000!

(b)! ! !

Notes!payable! ! ! ! Less!discount!on!notes!payable! ! Net!amount,!December!31,!2015! !

! ! !

!!!108,000! 3,924,000!

P3,924,000! !!!!!!108,000! P3,816,000!

(a)!

!

2015!

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1#8.! ! ! ! ! ! ! !

June!1! ! ! ! !

Cash! ! ! ! ! 2,700,000! Discount!on!notes!payable! ! !!!300,000! ! Notes!payable! ! ! ! ! ! ! 3M!x!10%!=!300,000! ! ! 3M!–!300,000!=!2,700,000!

Dec.!31! Interest!expense!! ! ! ! ! Discount!on!notes!payable! ! ! ! 300,000!x!7/12!

!!!175,000! ! !

3,000,000!

!!!!175,000!

2016!

May!31! Interest!expense!! ! ! !!!!125,000! ! Notes!payable! ! ! ! 3,000,000! ! ! Discount!on!notes!payable! ! ! !!!125,000! ! ! Cash! ! ! ! ! ! 3,000,000! ! ! ! 300,000!–!175,000!=!125,000! ! (b)! Notes!payable! ! ! ! ! P3,000,000! ! Less!discount!on!notes!payable! ! ! !!!!!!125,000! ! Net!amount,!December!31,!2015! ! ! P2,875,000! (a)!! ! ! ! ! ! ! !

Market!rate!of!interest!is!5%! Principal! ! ! ! Stated!interest!(8M!x!9%)! ! Maturity!value! ! ! ! PV!factor!at!5%!for!1!period! ! Present!value!of!note!at!May!1,!2015! Face!value!of!note! ! ! Premium!on!notes!payable! !

Page(2(

! ! ! ! ! ! !

! ! ! ! ! ! !

P8,000,000! !!!!!!720,000! P8,720,000! !!!!!!!!!0.9524! P8,304,928! !!!8,000,000! P!!!!304,928!

!

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

2015!

May!1! Equipment! ! ! ! ! ! ! Premium!on!notes!payable! ! ! ! Notes!payable! ! ! ! ! Dec.!31! Interest!expense!! ! ! ! ! Premium!on!notes!payable! ! ! ! ! Interest!payable!! ! ! ! ! ! 304,928!x!8/12!!=!203,285! ! ! ! 8M!x!9%!x!8/12!=!480,000!

8,304,928! ! ! ! !

!!!304,928! 8,000,000!

!!!!276,715! !!!!203,285! ! !

!!!!480,000!

Apr.!30! Interest!expense!! ! ! ! ! Premium!on!notes!payable! ! ! ! Interest!payable!! ! ! ! ! Notes!payable! ! ! ! ! ! ! Cash! ! ! ! ! ! ! ! 304,928!–!203,285!=!101,643!

!!!!138,357! !!!!101,643! !!!!480,000! 8,000,000! ! !

8,720,000!

Notes!payable! ! ! ! ! Premium!on!notes!payable! ! ! Interest!payable! ! ! ! ! Carrying!amount!at!December!31,!2015! ! ! (b)!! Market!rate!of!interest!is!12%! ! Principal! ! ! ! ! Stated!interest!(8M!x!9%)! ! ! Maturity!value! ! ! ! ! PV!factor!at!12%!for!1!period! ! ! Present!value!of!note!at!May!1,!2015! ! Face!value!of!note! ! ! ! Discount!on!notes!payable! !

! ! ! !

P8,000,000! !!!!!101,643! !!!!!480,000! P8,581,643

! ! ! ! ! ! !

! ! ! ! ! ! !

2016!

P8,000,000! !!!!!!720,000! P8,720,000! !!!!!!!!!0.8929! P7,786,088! !!!8,000,000! P!!!!213,912!

2015!

May!1! Equipment! ! ! ! ! ! Discount!on!notes!payable! ! ! ! ! Notes!payable! ! ! ! ! Dec.!31! Interest!expense!! ! ! ! ! ! Discount!on!notes!payable! ! ! ! Interest!payable!! ! ! ! ! ! 213,912!x!8/12!!=!142,608! ! ! ! 8M!x!9%!x!8/12!=!480,000!

7,786,088! !!!213,912! ! !

8,000,000!

!!!!622,608! ! !!!!! ! !

!!!!142,608! !!!!480,000!

Apr.!30! Interest!expense!! ! ! ! ! Interest!payable!! ! ! ! ! Notes!payable! ! ! ! ! ! ! Discount!on!notes!payable! ! ! ! Cash! ! ! ! ! ! ! ! 213,912!–!142,608!=!71,304!

!!!!311,304! !!!!480,000! 8,000,000! ! ! ! !

!!!!!!71,304! 8,720,000!

Notes!payable! ! ! ! Discount!on!notes!payable! ! Interest!payable! ! ! ! Carrying!amount!at!December!31,!2015!

P8,000,000! !!!!!(71,304)! !!!!!480,000! P8,408,696

2016!

! ! ! !

!

Page(3(

! ! ! !

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

1#9.! ! ! ! ! ! ! ! 1#10.! ! ! ! 1#11.!

! 1#12.! ! ! ! ! ! ! ! ! ! ! ! 1#13.! ! ! ! ! ! ! 1#14.!

! Case!1! Case!2! Case!3! ! ! !

! ! ! ! ! ! Situation!A! Situation!B! Situation!C! Situation!D!

! ! ! ! ! ! !

! ! ! ! ! ! !

Current!! P!!!120,000! P2,000,000! P6,000,000! P0! ! P6,000,000! P0! !

14%!notes!payable! ! ! ! Current!portion!of!16%!note!payable! ! Current!notes!payable!at!December!31,!2015!

! ! !

Noncurrent! P2,880,000! P0! P0! P6,000,000! P0! P6,000,000! P2,500,000! !!1,600,000! P4,100,000!

The!entire!amount!of!P2,000,000!is!reported!as!current!liability!because!as!of!December!31,! 2015,! the! company! has! no! unconditional! right! to! defer! settlement! of! the! obligation! for! a! period!of!at!least!12!months.! (a)! !

Premium!inventory! ! ! ! Cash/Accounts!payable! !

! !

225,000! ! !

225,000!

(b)! ! !

Premium!expense! ! Cash! ! ! ! ! Premium!inventory!

! ! !

100,000! !!!50,000! ! !

150,000!

(c)! ! ! !

Premium!expense! ! ! ! 300,000! ! Estimated!liability!for!premiums!outstanding! ! ! ! (40%!x!1M)/100!=!4,000! ! ! (4,000!–!1,000)!x!P100!

(a)! ! !

Estimated!liability!for!premiums!outstanding! ! (300,000!x!30%)/20!=!4,500!premiums! ! (4,500!–!4,000)!x!P28! ! !

!

!

P!!14,000!

(b)!

Premium!expense!for!2015!(4,500!premiums!x!P28!

!

P126,000!

(a)! ! ! ! ! ! ! ! ! !

! ! !

300,000!

! Expected!future!redemption,!beg! Coupons!redeemed!during!the!year! Coupons!expected!for!future!redemption,!end ! Total!coupons! Number!of!coupons!per!premium! Number!of!premiums! Net!cost!of!premium!(120!–!50)! Premium!expense!

2014! #! 40,000! 30,000! 70,000! ÷!5! 14,000! x!!P70! P980,000!

2015! (30,000)! 90,000! 80,000! 140,000! ÷!5! 28,000! x!!P70! P1,960,000!

Provision!for!premium!claims!outstanding! !!!!at!December!31,!2014!(30,000/5)!x!P70! !!!!at!December!31,!2015!!(80,000/5)!x!!P70!

!! P420,000! !

!! ! P1,120,000!

! (b)! ! ! ! ! ! ! ! !

Page(4(

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

1#15.!

! !

! 1#16.!

! 1#17.!

!

(a)! Allocation!of!original!consideration!received:! !!!!!Sales!revenue!(98%!x!P5,000,000)!! !!!!!Liability!for!Customer!Loyalty!Awards!(2%!x!P5,000,000)! Revenue!in!2014!as!a!result!of!redemption! !!!!!100,000!x!25/90! ! Revenue!in!2015!as!a!result!of!redemption! !!!!!Total!accumulated!revenue!from!redemption!as!of!12/31/15!! !!!!!!!!!!!!!(100,000!x!60/95)! Less!revenue!earned!in!2014! Revenue!in!2015!as!a!result!of!redemption!

! ! Sale!of!product! ! !!!!Accts.!Receivable/Cash! !!!!!!!!!!Sales! ! Accrual!of!repairs! ! !!!!Warranty!Expense! !!!!!!!!!!Warranty!Liability! ! Actual!repairs! ! !!!!Warranty!Liability! !!!!!!!!!!Cash/!AP,!etc.!

2013!

! ! ! ! !

! !

! P4,900,000! P!!!100,000! ! P!!!!!27,778! ! ! ! P!!!!63,158! 27,778! P!!!!35,380!

!! !

P!!!72,222! P!!!36,842!

! ! !

(b)! Liability!as!of!12/31/14!(100,000!–!27,778)! Liability!as!of!12/31/15!(100,000!–!63,158)!

2014!

2015!

!

!

!

1,000,000! !!!!!!!!!!!!!!!!!1,000,000! ! !

2,500,000! !!!!!!!!!!!!!!!!2,500,000! ! !

3,500,000! !!!!!!!!!!!!!!3,500,000! ! !

!!!!!60,000! !!!!!!!!!!!!!!!!!!!!!!!60,000! ! !

!!!150,000! !!!!!!!!!!!!!!!!!!!150,000! ! !

!!!210,000! !!!!!!!!!!!!!!!!!210,000! ! !

!!!!!!!8,000! !!!!!!!!!!!!!!!!!!!!!!!!!8,000!

!!!!!38,000! !!!!!!!!!!!!!!!!!!!!!38,000!

!!!112,500! !!!!!!!!!!!!!!!!!112,500!

! (a)! Warranty!Liability,!January!1! Warranty!expense!(8%!x!4,200,000)/(8%!x!6,960,000)! Actual!repair!costs!incurred! Warranty!liability,!December!31! (b)! On!2014!sales!(4,200,000!x!5%!x!½)! On!2015!sales![(1/2!of!3%)!+!5%]!!x!!6,960,000! Predicted!warranty!liability!at!December!31,!2015!

! 1#18.!

!!

! Cash! !!!!!Unearned!Revenue!from!Gift!Certificates!Outstanding! ! Unearned!Revenue!from!Gift!Certificates!Outstanding! !!!!!Sales!

2014! P!!!!!!!!!!!!0! 336,000! (148,800)! P187,200!

2015! P187,200! 556,800! (180,000)! P564,000!

!! ! !

P105,000! 452,400! P557,400!

2,000,000! ! ! 1,280,000! !!

!! 2,000,000! ! ! 1,280,000!

! Note:!!The!gift!certificates!estimated!to!expire!is!recognized!as!revenue!at!the!date!of!actual!expiration.!

Page(5(

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

1#19.!

! Cash! !!!!!Unearned!Revenue!from!Gift!Certificates!Outstanding! ! Unearned!Revenue!from!Gift!Certificates!Outstanding! !!!!!Sales! ! Unearned!Revenue!from!Gift!Certificates!Outstanding! !!!!!Revenue!from!Forfeited!Gift!Certificates!

3,000,000! ! ! 2,750,000! ! ! 150,000! !

!! 3,000,000! ! ! 2,750,000! ! ! 150,000!

!! ! ! ! !

P250,000! 200,000! !!(267,000)! (18,000)! P165,000!

! 1#20.! Refundable!Deposits,!January!1,!2015! Deposits!received!during!the!year! Deposits!refunded!during!the!year! Deposits!forfeited!during!the!year!(100,000!–!82,000)! Refundable!Deposits,!December!31,!2015! ! 1#21.!

! ! ! ! ! !

! (a)! !! 2014! 2015! ! Cash! 720,000! ! 864,000! ! ! !!!!Unearned!Service!Contract!Revenue! ! 720,000! ! 864,000! ! ! ! ! ! ! ! Cost!of!Service!Contract! 25,000! ! 100,000! ! ! !!!!!Cash,!Accounts!Payable,!etc.! ! 25,000! ! 100,000! ! ! ! ! ! ! ! Unearned!Service!Contract!Revenue! 72,000! !! 266,400! ! ! !!!!!Service!Contract!Revenue! ! 72,000! ! 266,400! ! !!!!!!!!!!!!2014:!720,000!x!20%!x!½=72,000! ! ! ! ! ! !!!!!!!!!!!!2015:!720,000!x!20%!x!½=72,000! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!720,000!x!30%!x!½=108,000! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!864,000!x!20%!x!½=86,400! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!72,000+108,000+86,400=266,400! ! ! ! ! (b)! !! 2014! 2015! ! Unearned!Service!Contract!Revenue,!Jan.!1! !! #####! !! P648,000! ! Sale!of!contracts!during!the!year! ! P720,000! ! 864,000! ! Service!contracts!earned!during!the!year! ! (72,000)! ! (266,400)! ! Unearned!Service!Contract!Revenue,!Dec.!31! ! P648,000! ! P1,245,600! ! Unearned!Service!Contract!Revenue!at!December!31,!2015!may!also!be!computed!as:! ! 720,000!x!65%!(30%!x!½)!+!50%!! ! !468,000! ! 864,000!x!90%!(20%!x!½)!+!30%!+!50%)! ! !777,600! ! Total! ! ! !!! ! !!!!!!!!!!!!!!1,245,600! (c)! ! ! !

!! Revenue!from!service!contracts! Cost!of!service!contracts! Profit!from!service!contracts!

! ! ! ! ! ! ! !

Page(6(

!! ! !

2014! P72,000! 25,000! P47,000!

!! ! !

2015! P266,400! 100,000! P166,400!

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

1#22.!

! (a)! ! ! ! ! ! ! ! !(b)! ! !

!! Subscriptions!sold!in!2012!and!2013! !!!!!(5,000,000!+!4,500,000)! Expired!subscriptions!in! !!!!!2012! !!!!!2013!(2,800,000!+!1,200,000)! Unearned!subscriptions,!Jan.!1,!2014! ! 2014! Cash! !!!!!Unearned!Subscription!Revenue!

!

!

! ! !

Unearned!Subscription!Revenue! !!!!!Subscription!Revenue! !!!!!!!!!!1,200,000!+!2,000,000!+!1,800,000!

! ! ! ! ! ! ! ! (c)! ! ! ! !

2015! Cash! !!!!!Unearned!Subscription!Revenue! ! Unearned!Subscription!Revenue! !!!!!Subscription!Revenue! !!!!!!!!!!1,300,000!+!2,400,000!+!2,000,000! ! ! Unearned!Subscription!Revenue,!January!1! Subscription!received!during!the!year! Subscription!revenue!for!the!year! Unearned!Subscription!Revenue,!December!31!

!! ! ! ! ! ! !

!! ! ! ! P1,000,000! 4,000,000! !

!! ! ! ! ! ! ! !!

!! ! P9,500,000! ! ! 5,000,000! P4,500,000! !

5,500,000! !

! 5,500,000!

!

!

5,000,000! ! !

! 5,000,000! !

!! 7,000,000! ! ! 5,700,000! ! ! ! 2014! P4,500,000! 5,500,000! (5,000,000)! P5,000,000!

! ! 7,000,000! ! ! 5,700,000! ! ! 2015! P5,000,000! 7,000,000! (5,700,000)! P6,300,000!

(

! 1#23.! !

(a)!

B!=!8,000,000!x!8%!=!640,000!

(b)!

B!=!8%!(8000,000!–!B)! B!=!640,000!#!.08B!! B!=!640,000/1.08!!=!!592,593!

!! (c)!

!!

1#24.!

B!=!.08!(8,000,000!–!T)! T!=!.30!(8,000,000!–!B)! B!=!.08!{8,000,000!#!.30!(8,000,000!–!B)}! B!=!.08!{8,000,000!–!2,400,000!+!.30B}! B!=!448,000!+!.024B! B!=!448,000/0.976!=!459,016!

! (d)!

B!=!.08!{8,000,000!–!B!–!T!}! T!=!.30!(8,000,000!–!B)! B!=!.08{8,000,000!–!B!#!.30!(8,000,000!–! B)}! B!=!.08!{8,000,000!–!B!–!2,400,000!+!.30B}! B!=!448,000!#!.056B! B!=!448,000/1.056!=!424,242!

a.!

Bonus!to!sales!manager!=!.08!x!3,000,000!!! Bonus!to!each!sales!agent!=!.06!x!3,000,000!! ! !

Page(7(

=! =!!

240,000! 180,000!

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

b.!

Total!Bonus!=!.36!{3,000,000!–!B!–!T)! T!=!.30!{3,000,000!–!B}! B!=!.36!{3,000,000!–!B!#!.30!(3,000,000!–!B)}! B!=!.36!{3,000,000!–!B!–!900,000!+!.30B}! B!=!756,000!#!.252B! B!=!756,000/1.252!! ! ! ! B!(Each):!603,834!/!3!! ! ! !

=!! =!!

603,834!(total)! 201,278!

B!=!.32!{3,000,000!–!B}! B!=!960,000!#!.32B!! B!=!960,000/1.32! ! ! ! B!(Sales!Manager):!!727,273!x!12/32!! ! B!(Each!Sales!Agent):!!727,273!x!10/32!! !

=!! =!! =!!

727,273!(total)! ! 272,727! 227,273!

! c.!

! 1#25.!

! B!=!.06!{9,000,000!–!B!–!T}! T!=!.30!(9,000,000!–!B)! ! B!=!.06!(9,000,000!–!B!#!.30!(9,000,000!–!B)}! B!=!.06!{9,000,000!–!B!–!2,700,000!+!.30B}! B!=!378,000!#!.042B! B!=!378,000!/!1.042!=!362,764! !! T!=!.30!(9,000,000!–!362,764)! T!=!2,591,171!

!

1#26.!

! Accounts!payable! Mortgage!notes!payable! Current!portion!of!bank!notes!payable! Interest!payable! Liability!for!damages!(600,000!+!900,000)/2! Value!added!tax!payable! Income!tax!payable!!! SSS!premiums!payable!(45,000!+!50,000)! Philhealth!contributions!payable!(22,000!+!28,000)! Pag#ibig!contributions!payable!(18,000!+!20,000)! Withholding!tax!payable! Total!current!liabilities! !! !

MULTIPLE(CHOICE(QUESTIONS( Theory( !

MC1! MC2! MC3! MC4! MC5! MC6! MC7! MC8! MC9! MC10! MC11!

D! B! C! B! B! A! D! C! B! C! D!

MC12! MC13! MC14! MC15! MC16! MC17! MC18! MC19! MC20! MC21! MC22!

B! D! B! B! A! B! A! B! C! D! D!

Page(8(

P!!!270,000! 1,300,000! 100,000! 7,500! 750,000! 288,000! !315,000! 95,000! 50,000! 38,000! 120,000! P3,333,500!

Chapter(1(–(Current(Liabilities,(Provisions(and(Contingencies(

Problems( ! MC23! D! ! ! ! ! ! ! ( MC24! A! ( MC25! D! ( MC26! C! ( MC27! ! ! ! ( MC28! ! ! ! ( MC29! ! ! ! ( MC30! ! ! ( MC31! ! ! ( MC32! ! ( MC33! ! ! ! ( MC34! ! ( MC35! ! ! ( ( ( (

Reported!!accounts!payable! Goods!in!transit!shipped!FOB!shipping!point! Goods!lost!in!transit!shipped!FOB!shipping!point! Adjusted!amount!of!accounts!payable!

!P540,000! 30,000! 15,000! P585,000!

Proceeds!=!100%!#!10%!=!90%!;!Effective!interest!=!10%/90%!!!!!!!!!!!!!!!!!!!!!!!=!11.11%! P5,000,000,!which!is!the!reasonable!estimate! Given!(Kindly!note!the!typographical!error!in!the!textbook;!amount!should!be! P5,500,000!instead!of!P550,000)!

A! ! ! !

Accrued!salaries!payable,!December!31,!2014! Salaries!expense!during!2015! Salaries!paid!during!2015! Accrued!salaries!payable,!December!31,!2015!

D! ! ! !

Contingent!/!Additional!rent!!!6%!x!(4.5M!–!2.5M)! Electricity!(8,500!x!½)! Telephone!bill!for!December! Accrued!liabilities,!December!31,!2015!

D! ! ! !

Unearned!service!contract!revenue,!January!1! Cash!receipts!from!service!contracts!sold!during!the!year! Service!contract!revenue!recognized!during!the!year! Unearned!service!contract!revenue,!December!31!

P1,080,000! 1,920,000! (1,560,000)! P1,440,000!

C! ! !

2013!contracts:!!1,400!x!1,500!=!2...