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    Document Exercise

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    sabit.michelle0903

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    Document Exercise

    Uploaded by

    sabit.michelle0903
    6 views2 pages

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    6 views2 pages

    Document Exercise

    Uploaded by

    sabit.michelle0903

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    Accounts Payable: P5,841,600


    Solution:
    Accounts payable per ledger 5,440,000
    Debit balances in suppliers’ accounts 240,000
    Goods in transit on 12/31/20, FOB shipping point 192,000
    Unrecorded purchase return (160,000)
    Accounts Payable, as adjusted 5,712,000
    Accrued janitorial expenses (144,000× 2/3) 96,000
    Accrued utilities (67,200 × 15/30) 33,600
    Total 5,841,600

    2. Notes Payable: P872,000


    Solution:
    Principal amount due, 10/01/21 800,000
    Accrued interest payable (1,600,000× 18% × 3/12) 72,000
    Total 872,000

    3. Estimated Liability for Purchase Commitment: P192,000


    Solution:
    Estimated liability for purchase commitment [320,000 × (5.00- 4.40)] 192,000

    If an entity has a contract that is onerous, the present obligation under the contract shall
    be recognized and measured as a provision (PAS 37, par. 66)

    4. Accrued Salaries and Wages: P912,000


    Solution:
    Accrued salaries and wages 776,000
    Income taxes withheld 56,000
    SSS contribution payable 64,000
    Philhealth contributions 16,000
    Total 912,000

    5. Accrued Litigation Payable: P2,500,000


    Solution:
    Midpoint of the range [(2,000,000+ 3,000,000) ÷ 2] 2,500,000

    PAS 37 par. 36 states that the amount recognized as a provision should be the best
    estimate pf the expenditure required to settle the present obligation at the end of the
    reporting period. Par. 39 further states that where there is a continuous range of possible
    outcomes, and each point in that range is a likely as any other, the midpoint of the range
    is used.
    6. Accrued Salaries and Wages: P628,037
    Solution:
    B= 10% (9,600,000- B- T) T= 30% (9,600,000- B)
    B= 10% [9,600,000- B- (2,880,000- 0.30B) T= 2,880,000- 0.30B
    B= 10% (9,600,000- B -2,880,000 + 0.30B)
    B= 10% (6,720,000- 0.70B)
    B= 672,000- 0.07B
    1.07B= 672,000
    1.70B= 672,000
    B= 628,037

    7. Loan Payable: P1,280,000


    This transaction involves assignment of accounts receivable, wherein the company
    obtained a loan using the receivable as security. Accounts receivable assigned will be
    included in trade and other receivables, while the related loan will be reported under
    current liabilities.

    8. Estimated Premium Liability: P576,000


    Solution:
    Estimated coupons to be redeemed (160,000× 60%) 96,000
    Less: Coupons redeemed (64,000)
    Coupons outstanding 32,000
    Divide by: Exchange rate 5
    Premiums to be issued 6,400
    Multiply by: Net premium cost ( 100+ 20- 30) 90
    Estimated liability for coupons, 12/31/20 576,000

    9. None: P0
    The revised PAS 1 par. 56 that when an entity presents current and noncurrent assets, and
    current and noncurrent liabilities, as separate classifications on the face of the statement
    of financial position, it shall not classify deferred tax assets (liabilities) as current assets
    (liabilities).

    10. Warranty Payable: P512,000


    Solution:
    Warranty payable, 12/31/19 416,000
    Add: Warranty expense accrued during 2020 1,504,000
    Total 1,920,000
    Less: Payments during 2020 (416,000+ 992,000) (1,408,000)
    Warranty Payable, 12/31/20 512,000

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