Liabilities Quiz (2)

8/11/2019 Liabilities Quiz (2)

1/13

ln

ltitrrrc teyl

l'

r

o

fcss

i

o

n

sl

.l

ttvt

crv

qrrd

Skill s

D ovc

I op

m

un

t

,20

t9 Claro

M.

Rccto

Avenlrc,

Munih

(treside

UE,

Monila)

Tclophorrc/Ftx

733-7832, c-mull

PMCTICAL

ACCOUNTING

I

..

Uabllltles

-

Current

and

Noncurrent

N. S. Robles

.

CURRENI

LABTUNES

Hqw much ls

the

of

Hugo

Trading as

of

DecerilbtiSI

-,.i

i

,:r .. nr,aat a

:Company

at

December'31, 2007)'

the

end of its

account

balances.

Hugo's

2007

financial

statements

'.r

P

gz,soolgolb

:

35,000

,

..

.:

:

I

'

6oo;qpo

O

,(g(fi)

int.

1,200,000

(_,,

2007 are'due on July 31;

2008

and

pay

lnterest

at

a

I

r

l

ri

'

'

:

rclr'1,

2008.' Interest at

9%

has'been'paid.up

to

lstlc

ratb). Hugo

inEnded

at Decimber

31,

7007

to

wlth

a

new.

l0-year

moftgage'note.

On

March

1,

on

thi

pilqclpal

balance and refinanced thi:

remainlng

le

balance at

December

31,

2007

were

two

ctistomers'

and

had credlt

balances

totalling

P18,000.

The

mers wlro'were

expected to'

order,more

merchandise

ts

to those

future

purchases.

\

a

portlon

of lts

factory

to a

tenant

for

P3Q000

per

ent

for

the

12

months'ended

October

31, 2008

was

i

recelved

as

required

and

was credlted

to

Rent

Revenue.

.Cfitf'1-,

r

much ls

the

of

Huqo

Tradino as

of

oecerffb-dilftYzoo7?

1,991;g:: I .

P

,

953,ooo

3.

How

much of the

Notes

Payable,.net

of

discount should

be reported

as

pirt

of current liabilitles

on

December 31, 2007?

It'A

ty

of

qpOob

-U-

P 797.440

c.)

B[' zrz,ooo


2/13

on

the lncome statement

for

the

y-ear

\

'tr$/x

\t'/,

=

:.J

o. P)torouu

-.

':i

"

.

-fr0;o

'

--:::;o-

P

ero.ooo

.

,'

'

-'*'\tlfffi

Itli.oott\

eIo

lsqootz\

il

o,oo a

*WZ

ffi

i,q4=

6: Assume

that'

sbles

and

repalrs

.occur

eve

ly

tfiqlghoqt_

ach

year.

How

much

repalr

costs

retaung,to

2006and

2007

slbs

are

@@

.

lPrt.'1"(o

u

o

..

On

December

28,

2007, a

supplier:

authorlzed Accounts

Company to return

goods

billed

at

and

shlpped

on

December

20,2007. The

goods

were returned

by Accounts

C-ompany

on

December.Z1,2007

but the P160,000 credit memo was

not received untll January

6,

2008.

'P

.910,000

'

',

.

P,'

EEOrOOO'

'

.

'P'

sto,ooo

How much

ls.the tota

cl\'

p.eso,ooo

)W:

ntrol

of

Accounts Company amounted to

accounts,

The

unpald voucher file lnclud

December

3L,2007:

ndise sblpped

on

December

31,

2007,

9n,

e

shlpped

on

Decembe

r 26i, 2OO7

'

000

Janitorial

serylces

for

the three month

period

ending

?i",kn ri"'[ ;3i.3crcember

lG,

zooT to January

ts,

x'/1'

=

llr't5O

P5,928,.150

P5,768,450

,

P5,688,450

o4


3/13

rnrudr Is

ih warranty

expense

for

the

year

ended December 31,

2007?

P144,000

P108,000

P

83,200

P

38,00p

9.

How much

ls

the

Premlum

expense for the

year

ended

December

31, 2007? I

a.

P36,000

b.

P24,B0o

:

..

\q

P21,6OO

-'',\

10.

How

much

is

the

estimated

liability

for

warranty

at

Decernber

31,

2007?

'

a.

P136,000

b.

P108.000

\,

P

8o;ooo

d.

P 38,ooo

11. How

rnuch is

the

estlmated

premium

clainrs

outstanding at

December

31,2007?

a.

P26,100

b.

'

P24,800

r

C,

P21,600

\

P B,4oo

v'\

,.k

12:

Computerlink

Company

sells

personal

computers.

For

each

unit

of

personal

computer

sold,

the

'

company

sells a

service contract

for

tfptq@

The contract

provides

that the

personal

computer

sold will

be

repaired by

the

c-ompany within a

perlod

of

three

years

from

the date of

sale. Sale of

serulce

contracts and repalrs are made

evenly

throti$llUlitTdth

year.

Based

on

industrytrend.20o&ofrepairsaredonelnthefirstyea@,3oo/olnthesecond

year

and 50o/o

tn

th'e trurO

year.

lniorrnation

related

to the

service contracls foilEdrs

2005,

2006

and

200ffias

follows:

Number

of

service contracts

sold

Servlce

contracts expense

incurred

?-oo-5

800

P50,000

2006

2.007

1,000

1,200

P200,000

P350,000

polzx

2oL i

Q

1ttyu

-,

z

x

qoTo

't

lbo

tcwi2*,1o'.rrA

How

ntuch

31,2007?

tIr

expenses

ol" meeting

guarantee

for

service requirement on merchandise

sold,

on bonds

payable,

P57,500.

ls

the

total

curren[

llnbilil-ies

to be

presented

ln

the

balance

sheet

as

of

becember

P 126,750

P

1,921,100

P1,681;100

P1,429,100

lrrr11g1.

of

PrrrfcssionrJ

Rcvicrr.

nrrd

Skills

l)o,cloprrrcrrl,

Irrc

I'reclicet

.tccoun inB

I

-

Crrrcnl rn(l N.)n-


4/13

soq,

- oo ,

.oo

A

.

'.6.

14,

'Generous

@mpany'pays

bonuses

to

its

chlef

c

bl,

=

'

:

..35

(

s,ooo,

-

b)

I

dfficer

(COO)

'and

sales,trQnqger.

and

the

sales.

manager

get{87j,

The

'

tax

and

bonuses, tncomeh#

rate

is

HoW

much

is

15.

How much

ls

thg

lncome

tax

liabili$ at Decenrber 31, 2007?

q-o'l)

=

260,-0'0618

',

-tl

-

.)Sfs,oao

-e))

t.oSt

b

:

7cco,

r

31, 20

before

conslderlng

the

following informatlon:

i

January 6, 2008,

Grape

filed

a P20,000 claim agalnst the common

carrier.

sltlppul by

Gr.rp

on

Dcccrrtbct 2

,

.,.

j

recorded by Grape on

January

6,

2008.

What amqunt

should Grape

report

as

accounts

payable in

its

De

balance

'.

....

;

shee ?

t,too,ooo

P1,065,000

Lo

tooo

-

:

:

:.r

P ,O85,OOO

[ts,

ooo)

r.

;

',:.-pf,f

ZO,OOO

I

OC

S,ooO

17.'

'":'\ ir"

company'operates

a

retJll

store

and

must

ctetermtne the

proper

Decenrber

3 ,

zoo7,

y0-ar-eM

accrual

for

the

followlng

expenses:

'ha,

r

,

J

-,

'o-:,'The

stole lease calls;for

fixed

rr:nt

of P12,000

prcr

rnonth,

payablc

at

tlre beginning of the

lfCCrc

month,

arrd

addltlonal

rent

equal

to

60lo

ef

net

sales

over

[)2,500,000

per

calenrtar

year,

ll

',..':

payable

on January

31 of the

following

year,

Net

scrles

for

2007 are P4,500,000.

t{flq

'

il,;,ff r]

blll

of

P8,500

coveilns

li ,

nedoct

Lzl'tiloT to 1/15/08

was

receivecl January,

18.:''--',l.t9lon. Company

sells

contracts

agieelng

to

servlce.equlpment

for'a

three-yeai

perlod.

'

,

Informatlon.for

the

year

ended

December

31,.2007

ls as follows;

'

cash

recelgrts

fronr

servlce

contrdcts.sold

'

pg6o,00o

ilti/i

Service

contract'revenue

recoqnized

7BO.00O

r,:.titrr'/

)ervice

Contract'revenue

reCognized

780,000

&.titto,/

,

...

Unearned

service

cbptract

revenue,

Ullll

.'

..

,;570,000

Di)

'

In its

Decefiber

31,

2007''balance

sheet,

Melon shbuld report

u'hbarneo

seivice

contract

,\

19.

Mango Dept.'Store

sells

glft

certlficates

redeernable

only

when

merchandise

is

purchased,

These

gift

cQrttficates

have

an

expiration

date

of

two

years

,after

lssuance

date.

Upon

redemption

or

expiration,

["lango recognlzes

the uneame#fc"set]ue

as

realized.

Inforrrlatbn

for 2007 is as

follows:

lnttitutc

of

Profsrioool

Revicrv

und Skills

Devctopnrenl.

lnc


5/13

Unearned

revenue,

llll0j

-Gift

certiflcates

sold

Gifu certificates

redeemed

P

65,000

Expired

gift

certificates

225,000

Cost

of

goods

sold

195,000

1213_1196

P12,000

65,000

P10,000

600/o

ln its December 31, 2007

balance

sheet, Mango

should

repo(

unearned

revenues

of

P51,000

P57,000

P85,000

P95,000

20. Cherry Company sells

magazines subscriptions

for

one to

three

year

periods,

Cash

receipts

from

subscribers

are

credil,ed

to magazlne subscription:;

collected

in

advance,

and

this

account

had a balance

of

P2,400,000

at

December

31, 2007,-

belqre

year-end adjustments.

Outstanding

subsc7ipTi6fi$"t=Det6mbei5f76-07-expire

as

follows:

O-Uring

20OB--

P600"000;

Durlng 2009

-

P900,000;

During

2010

-

P400,000

In its

December

31, 2007 balance

sheet, what amount should

Cherry

report as

the

balance

for

magazine subscrlptions collected

in

advance?

21.

What

amount

should Cherry

report

.---

December 31, 2007?

\

P 5oo,ooo

b.

\

Pl,2oo,ooo

c.

P1,900,000

d.

P2,400,000

22$

Atis

Company

grants

all

employees

two rveeks

paicl

vacation

for each full

year

of

ernployment.

Unused

v_a_cation

time can

be

accumulated

and carried fonrvard

to succeeding

years,

and

will

be

paid

at the salaries

in

effect when vacations are

taken

or when employnrent

is terminated.

There

was

no employee

l.urnover

in

2007,

Additional infornratiorr

relating

to

the

)rear

ended

December 31, 2007 is as follows:

Llability for accumulated

vacatlons at 12/31/C6

lrhe

P

250,000

from

(the

rL'rrr \Lrrc

tso'ooorl'lo'/[stlrc

justed

200,000

Atis

g

emplo

07, its

annual

salary

-

lncrea

7,

Atis

pay

expense

of

\'-

P

5o0,ooo

P1,200,000

P1,900,000

P2,400,000

b;

P225,000

'

c.

P300,000

d.

'

P350,000

:{

231

The Pomelo

Company

employees

are

paid

calendar

year

2007 is

-4

td

y

1kw

Z4@,od

46P

'o7

d

as

rnagazine

suLrscripl-ions

revenue for

the

year

entled

salaried

un

plo5,,:so

are

paid

biureekly.

Occasiorrally, advances

made

to

bar:k by payroll

dcductions.

Infonnation relaling

to

salaries

for

the

as iollov,rs:

EmpL:yec

a(lverrrcr:s

Accrued

salaries

payablc

Salaries

expense during

the

year

Salaries

paid

during

the

year

(gross)

At

Decenrber

31,

2007, rtrlrat amourrt

should

pomelo

rt:port for

accrued

a.

P136,000

P100,000

P

94,000

P

82,000

Guava

Company pays

all salaried

eniployees

on

a biweekly

basis.

Overtime

pay

however, is

paid

in the next

biweekly

period.

Guava accrued

s.alaries

expense

only at

its June 30

year

end.

Data

relating

to

salaries

earnecl

in

June,

2007 are

as

follows:

c.

d.

a

a

a

a

Last

payroll

was

paid

on

6125/07,

for

ttre

two-week

period

ended

gl25l07.

Overtinte

pay

earned

in the

\^;o-week

period

ended 6125107

was

p(2,000,

Remaining

work

days in

2C07

r','erc

June

28,29,

anct 30,

on

which

thiE(vas nr)

o'rertime.

The

recurring

birveekly

salaries

toiat

p750,0C0.

a,(,{11i,.

'.'a

t'r'

'

24.


6/13

.,

",'..

'(

'Assumlng

a S':day work

uFpt

and

a

Frcai

year

endlng

June

30, Guava should

report

a liability

at

June 30, 2007

for

accrued

sabries

c{

.,:

In

.t,

af2gQZ,'the

Chico

Company

be,carp_i1yo-tyld

[,lltigatlon,

,

Ai b

result

of

thls litlgatlon,

it

Otddg@

tha

Cfrico

will

have

to rsvJi,OCO.

Ib

July

2

0.7,

a

comPe

1qg"r.-19

1

.sultE-galnpt

Chko

alleging

vpla'.br

cf

antJtrust

laws

seeklng

damages

of

r

denles

the

atlegations,

ard

the

:ikelihood

of Chico

paylng

any

da

iili;ild;;

iooi,

ur.

sovernrnent

brcusht

action

.girnit ehico

ro

syter.rwr.

6vyr,

vrv

:rv 9'

Laguna Bay.,

lt

ls reasonab\'

pcfie

that

the

government

will

be

su

nt

of damages

Chico

will

have

to

pay

is not reAsonably determinable.

Wrat

amount,

it

any,

'

should

be accrued

by a clrarge

to

i:come in 2007?

"

u,

1;'--i.'

P2,709,000

.i..r

PT,OOO,OOO

d.t"';"

''

P

0

:r.r

i-.,,-:

.

At December.3l,

20C7, Durian

Co;'p. cr.,ed

notes

payable

of

F1,000,000

with

a

maturitydate

of

Aprll

30,

2008.

These notes

did

nct

arise

from

tra-n:;at:tlons

ln

the

normal

course

of

business,

.

.OnJebruary

l,

2008, Durian

issued

P3,0CO,

tention

of

uslng

'

partof

the bond

proceeds

to

liqurdate

the

Pl.

's

Decembef

31,

iooz

financial statements

vvere

issuec

on

Ma

1,000,000

notes

payable

should

be

classified as oJrrent

in

Durk

,

ZOOII

t.a.;'

P0

-'

'

.b.

P'100,000

.

'

P

,

900,000

,

Pl;000,000

:,.",:

.

'-

On

Novembei S,

2007,

Langka

Trading's

tr

rck was

in

an accident

with

an

auto

driven

by

s

for'

.

ill

be

that

that agy other

amount.

Langkat

accountlng

lal

statbrnents

were

lssued

on

March

2,2008,

.:r', P3001000

'.,

P325,000

::d"::.

'i,P4sorooo

,"r .

,

ri.

;

Mabolo

Company.sells

washing

machines

that

car a

3-year

warran

sales

,

A.e[Lat-]&arra-0rrEipenditses

..

;

Mabolo

Company.sells

washing

machines

that

car a

3-year

warran

..:.;i Waffan

llv

rsle

,i

l,

2OO7

ort

warranty

expense

of

,'=-: ":o^

\

'

'

Psso,OCo

\o,

_.

P72O;OOO

7rc,@9

onJanuary2'200s'#iid[ft11.'j'*iflitil$##.,.;;[f,

;l*i{#s{a:iiT

r sale. Sale ancl i[ warranty expendltures for

the

period

2005'2007

2006

2,500,000

37,500',

' 2007 3,50

112,500

What

amoLlnt

should Makopa report

as

b.

P112,500

-

2qoo

aao

:,e

P115,000

r"-.

:

'

\I

Pzlo;ooo

xo1o

.'\

--=.-^


7/13

j.a't

\

fgtel

Company

started

selllng

a

new

p

arranry

against

defects.

.

Based

upon

past

experience

w

warranty

costs

.

-

related

'are

computecj

as follow

Second

year

of

warran

I

sales

and

actual

warra

glven

beiow:

2006

.r

.".

2007

predlcted

warranty

expense covering

2006.and,,2007

sales'stillunder warranty?

B:

X33;333

fYst"'h

-Fllnr

c.

P4s,z4o

6q6oo7.

e"l^|,'h

I

IOIYO

:

What

_amount

should Apple report

as

its

: D?? ,iflfl

'

^-\

, a

-

Pss,74o

(r1U.Do

l

{l^

Stlg3ro

32y

The net

lnconre

for2OOT

of

Banana

Company'before

iny

deduction

for

bonus and

lncome

bax

Sales

P420,000

P696,000

Actualwarranlyexpenditures

iaRQn_--

lRnoo

.

How

much

ls

th

mpensatlon

plan,

the

general

mahager

Is

c,

P712,.135.20

=

0.W

-

d.

,_

P975,000.00

,c{(rs

.

Beglnnlng

the

year

2007,

the Asian

7,

8,000 beer

mugs

were

ordered

by

the

nrugs

were

already

distributed to

lbc tq

3.

7,

)

'rcm.

/ht)

Pnm

'rcm,

Erp

FEl.

Pnn

33,

6ash

rn.

7

Jto

P' \

lnu.l

nrugs

were

already

distributed to

:rsr.

How

much

ls

th(liSbil$rthat

As

cord

on its 2007

batance sheet?

ill:i33

}=16,

n zozsO

--

l3/S6D

'

\

that Asian

should report on

their

2007 lncome

statement?

.

Pl5,750

P20,250.

P33,750

P36,000

35.

36.

Plneopple

Company

poys

lts

general

nlansger

an

annual bon

de


8/13

37.

On

May

lr'2oo7,

srrr

o.rmpany

5e-:er

marketing

a

new

brand

of coffee.

As

part

of

their

b. P135,000

dlscounted

at

the bank at 100/o ls

b. P135,000

38. The effective

lnte

10.87olo

10,000,6

I

lO

,?:i?ff

'.q;

39.

To ralse

money for

working

capital, the

Lunar

Sales

is

corrsidering

a

one-year

loan from

Metro Bank.

Two

alternatives

are available:

.

Alternatlve

1:

A P100,000

,

l5o/o note

lssued

a

face

value

Alternatlve

2;"

A

P1OO,O0O,

nonintet'est-bearing

note,

discounted at l5o/o.

,11t

S

'The

company

plans

to

borrorv on November

1,2007

and'the accountlng

peiioO

lollows

the

calendar.'

If

you

are

asked

by

the

Chief

Executive

Officer on

the

preferable

alternative to

take,

.

ossurnlng

whatever difference

is

rnaterlal

tn

amount

and

based

on

your

knowledge

of

\

ttccountltlg for

notcs,

whot

oclvlsc

sl:ould

you glve

the

CEO

of

the

Lunar Sales?

\\

Attoinoilvo

t

b

,

fltlror altcrnotlvo

c.

'

Altornotlvo

2

d,,

',

0oth ulternatlvcs

vj:

404

The

Qulckblte

Food Co.

dlsl,ributes to

consunrers

coupons whlch

lnay

be

prcsented

(on

or

llefore

:

a stated expiratio,r date)

to

grocei's

on

certain

producb

of

Quickbtte.

fio

grocers

\Ore

reimbursed

when

they

send

the

ccupons

to

Quickblte.

ln

Quickblte's

experience,

500/o

of

such

coupons

are redeemed, and

gener-ally

one month

elapses

beWveen

the date a

grocer

receives

a

'

couporis

from

a

consumer

and the date

Quickbite receives

it.

During 2007, Quickbite

issued hrlo

'separate

serles

of coupons

as fcllorvs:

the

----------,

*r

Issued on.-

tltloT

7lLl07

,,;

--_Ie ilalue

125,000

180,000

Consumer

rxpXalso

DaJe

6130l07

tzl3uo7

Amount

Disbursed

as

ot

12.31.07

P59,000

.

75,000

'and

credits

to

cash of

liabllity

for

unredeemed

The

only

journal

entries to

date recorcled

debits

to

coupon

expense

P134,000, The

December

31,

2007

balance sheet

should

tnclude

a

'

coupons

of

i

.'-.-

\----pls,O00

:

c\

pir,oooi.

'' d; P9O;O0O , :

:

On Janudry 1,

2007,

Castro

Appllance

Co.

offerect

a

three-year

warranty

from date of

sale

on

any

of

its

products

sold

after

that

date,

Tlre

offer

was

part

of

a

progiam

to

lncrease

sales.

Meeting

thg:[ernrs

of

tlre rvarranty

rJ

to

cost 2olo

of

sale nder

warran[y

ln

2007 totaled

P9,000,000.

the units sotcj in

2007

hese

units

were

iepalred

or

replaced

at

a

s0o. The

amount

of

that

is

,

d. P

32,500


9/13

or.{

'on

June

18, 2007,

--'?nd

credit

terms

O

.Company

recelved'goods

from

X

Corporation,

with

lnvolce of

p90,000

Darrel

paid

thls

account

on

July 18. Darrel

records

purchases

net

of

sales,

Irene

Corgpqrtlon

offered

a

premlugngf

plus

remittance

o(P5)

Each hairbrush

costsPl8,>

2007

foltow:

'

\J

lO

\/

,

Bottles,ofshampoosold

.i

;

2006'

''2007

.

:

Numbei

of

halrbruSh

dlstrlbuted:

.

'

i

f,furfrur,

of

nilrUruin

.*peauO to be dlstribut

,'

. :

perlod/s,

as estlmated at

year

end

'

How much ls tlp

premium

expense

for

the

44.

How mucti llablllty

for'prcmlum'clalms

balance

sheet?'

.

-

paylng

frelght

of P

cash dlscount At

what

amount

should the Accounts

Payable

tti X

Corporatlon

be shown

on'Darrel's

1

t

31,

2007

'

a.

.

P1,820,000

.r

b.,

.P1,495,000

\

c, .,,

.P1,170,000

'

\il.'Pl'

a 6:-o-06

:

gr=ocT

)'3

,\

.,

{rll:33ffi,:; ,'

;",i.,'i[,ro

]

n.,

(Gtsats]2-,as(Qrqr'fta-r)

ir; i:iAt. .

.

"

:

.

t/(,.c,4lr.,y(iorro,,en,.or(sttot.tt\

.15.

Whatwasthe

bonus

ratell gz.

16A,l* f:

327,

.

.

:...

I:

,

,

1'll1l.,:'

i

-,

6.ior,,s22'

B:

x

(

6tctQi8)2

-,?5

(Q

ts(',fi2

-

I

45.

i.

':l

i,J,"#briirlnable ,'

:

y.

7

b'ofi'

LY'

z

x

L@tlvtY

2t-"

'

?

'

-- ,

/

r, rao.g77.

-

ioocc zo.

z\-

\1.

'

D0poslts for

contalners

at Decernber

31, 2006

fronr

clellverles

ln:

"=':'-*-2005

.

....

-,i,

.

2006'.

';'

Deposlts

for,contalners

delivered

in

2007

Deposlts for

ciintalners returned

in

2007

fronr

deliveries

in:

fYqso,ooo

L

430,000

,

r

780,000

'

:

2005

2006

2007

r'(ot,:

.Bo,ooo

\

25o,0oo

-

90;000

lrrr1i1r1,'

ul

l'rofsrlurrrrl

llcries.

nrxl Sl.tlls

l)crt

lrr;11116,'1.

gn.


10/13

NO

N.

CUR R

ENT

LIA

BI

LTTTES

1.

ets

a

P4,000,000,

}1ggl

bond isgue.dated January

\2007,

Tlre

bonds

y

on January

1

and July

I

at a

stated

rate

ol

'rZYg,

The bonds

are

sold

tlme the effbctlve

yleld

ls 10%0,

f,erttiq61

..:

I

pay

nt)

What is

the

bond's market

prlce

at

July

L,2OO7?

Round

off

present

value factors

to

two

decimal

4Mr

o,"o

,Ollm

'lnnxC{.xY:33

'

=

lWl@

,ltS.llrc

9:Pcco

-

2.

I$: r":i

6PBry tsyd

j

5:

9 I

o:

99

o:

&h

3 9-rPI

bo*1

a I?q ? 1,-?29 $"#f $

$,:

.rnqur"rr*;dbd.

rtle

uo,iar.re

prE#'at

tciota. The bonds

pay

tnteresi

on

March

31

ahd

nuch

ls

the loss

on

tlre retircnrent

of

P2.0 rnilll

'

|Stteryl}.

Interest

Company

uses

the effectlve

interest method of

amortlzatlon.

'

terest

Company's

lncome

statement

for

the

year

er to neirest

peso..

\

P{77,844

et19D

.d,

i'

P450,000

-

hlu'{tl

3.

On

July

1,

2007,

Convertible

Company lisueri

P

Each

P1,000

bond

\-

At

a

later

lnterest date,

prlor

to

maturity

clate

mllllon

face

vaiue

bonds

exerclsed.thelr

converslon

privilege

when

each ordlnary share

sells

for

P180.,

After

approprlate

bremlum

amortlzatlon

and

lnterest

paynrent,

the

premium

on

bonds

payable

has

a

balance

bonds

were

re

on

this

.

date at

'\

,,

qeco

b.

c' w

\li

d. lg-'

{

The

ll.

t)'

\

P4,219,200

P4,159,200

P4,oo0,o0o

P3,842,000

PO

P 8,000

P20,000

4.

5.

6.

;';;:

o.o,nll,

sa

n

on *TH\rr*i:ffi

ffi,ffiIti..

.

.m

CHBr'lo

,#I"fl

\olu.e.

ot

cP.

fa,pfk

Xecro

kroo

33,000

P60,000

P35,000

P25,000

PO

Present

value factors

are as

follows:

Present

vaiuc oF

Pl

for

10

perir:cls

Present value

of an ordinary

anrrui[y

of

Pl

for

t0

periods

C{

(

bqtls

Crfir:rc|

to\

f


11/13

.

PV

of an'ordlnary annuity

of

1

for

10

perlods

9, On July

7,2Cf,7,

Ultra Company'issued

PS,OOO,OOO of

its

10%,'7'year

bonds

with

one

OetactriUte'wanant

attached t6 eicn-p1,OOO

6ona.

rEach

warrant

p;oviaes

for the

right,to'-'

purchase

20'shares

of

P15

par

ordinary

sirarc

for P20leach.

The maiket

value-of the

ordina'ry

ihare

was'P25 at'July 1,

2007..

The detachable-gaqrant

has

a

market

prlce

ofrF6T=er-ch

and

the

bond without tlre warrants attached

is

quoted

utgg)Ttu

bonds

were

sold

t191.

:What

are the

values

assigned

to

tlre

bonds

and

warrants,

respecEvely?

t2cO,tm

b,

PqT8SO,OOO/P350,000

{

InYUo'

?r}k

\

ii:333:333iii33;333

On May

l,2Oq7,

Vlslon Corp.

lssued

P2.0

rnllllon,20"year,

l0o/o

bonds

for

P2,120,000.

Each

PI,OOO

bond

had

a detachabte

warrant eligible

for

the

purchase

of

one

share

of

Vision's

P50.par

orclinury

share

for

P60. lmmectiately

al'ter the

bonds

were

issuecJ,

Vision's securities

ltad'the

folloraring

nrarket values:

109/o

bonds without

warrants.

-

P1,040;

Warrant

-

P

20;

Ordinary

Share,

P50

par

-

P56.

What

anrount should

Visiorr

crerlit

tu'Brt-firiunr on

bonds

p.ryable?

followlng

lnforrnation

pertains

to

Sanfo

@mpany's

issuance

of

bonds

on'July L, 2007,

-Eace

amoqnt

-

P5,000,000;

Term

-

10

year;;.-.Stated

interest

rate

-

60lo; Interest

payment

datpq

-

'hrlv

1 enrl lanrr:nr 1. Fffarlirro rriold

-'1)O/^\

ates

-

July t and

January 1; Effective

yieia

-'f

ZoA)

,\-,

)

.9%

L2%

'6,7L

6.t4

9.82

8.51

gDtro

1.?1"-f

lt,t?

=

s

-tFl?

-

?jftrE5

'P2,970,000

:.

P2;910,000

P

80,000

P

40,000

PO

On

July

l;

2007,

an

intere:;t

date,

Ure.

entir'e

P1,000,000

of

Hill

Co.

boncts

were converted

into

20,000

shares

of

l-lillrs ordinary sha.re each having

par

value

of

P40 and

a

market

value

of

P55.

There ls'P4,OO0 unamortized discount

on

the

bonds:'"

At

time

of

issuance

of the

convertible

bonds,

paid

in capital arising

fronr

bond

conversion

privilege

recorded in tlre accounts

is P25,000.

What

is

the

gain

or

loss

on

conversion

recognizecl

by

l{ill

Cornpany?

P140,000

gain

P22I,000

gain

P

79,000

gain

PO

M

8,11

13.59

It{1

(fis")

8.

On

January

1, 20

ccru

The bonds

are da

ture

.

annually

on

Aprll

on

payable,

net

of discount,

at

-

I

'

a.

.P3,060,000.

I

b..

P3,000,000

10.

'lrii

r

Bo/0,

P2.0

rnillion

,face

value

convertible

bonds

rising

from

Bond

Conversion

Privileqe

recorded

-'

annually

on December

31.

Each

P1,000

bond

lue

ordinary share,

Tlre

unamortized

premium

ecember

3L,

2007, an lndlvldual

holding

200

of

the

bo.n(s exerclsed the conversloiiTilijTege

when

the market

value of Universal's

prdlnary

share

f*

($p:r

share, LJni's

entry'to reiord

the conversion

should

include

a credit

to Stare

the

bo.nds exerClsed the converslofi

prlvilege

when

the market

value of Universal's

prolnary

snare

was

fig)per

share, LJni's

entry'to reiord

the conversion

should

include

a credit

to

Strare

;;;i,\rJi

(k,


12/13

t

I

0n

Januar/

2, 2007,

Mall

corp.

lssued

p2,000,000

of

[0-year,

g%

bords

at

par.

rhe

bonds,

dated

January

t,'2007',

pay

lnterestsenrl-annually

on

January

t

ard

July

l.

Bord

bsrec

.

.,

,-..

',,-1

rL1f

lJtvYv.

.

.:

;

.

,.,r._;i;.-.i,i.i

il;,

.

i

... :

,:

..

t

. ...

14.

On

January..J,

2007,

when the market

rate

..

face

amount of

bonds,

wlth

ln(erest to be

.-;.r-i

mature

o4

December

3\.20L4 and

.were

I

,

dlscount should be

amortlzed

by

the lnterest

,,,\.il,fif

ll33,

'

r'

'Pe

i'.r'P51725

I 6d6 lct

Eocrc

0

face

value

bonds.

The

bond was

orlginally

sold

'

-

effectlve interest ratd

.

rnet

bond

'

unt of

the

outstanding

bond

What

ld

Well repoft ln lts

June 30,

eet?

i

----

,l

l

l

.::..

t, . ;

l

.i

16.

i

sued

lts

9olo

P2

mlllion whlch

i

bonds

were

i0%

resultlng

lh

',

Corp,

usos

t

g

bond

discount.

cernber

31.

namortlzed

bond

:

,i

,":'

.,.'

2,880 for

P1,000,000 face

amount,

Lzoh bonds,

a

'

',

prlge.that

yields

l0Vo.

Interest expense

for

the

iix

months

ended

December

?1,

2007,

ls

,+

,

P69,667

,,

,

Olab

.

;-I'.'il',':i.i-.1:i:.',;

;.,',,

',,'i.l,.;

.

,,,:'".,..,''

,.

.t r.

r,

.:.

.,

.r

,

18.

-

9l

December

3l;'2006,

Bell Co. lsuecl'P2,00O,OOO,

8olo

Seilal

borids,

to be repald in the

imount

of

Pqoo,0oo

each

year,

Irtterest

ls

payable

annually

on

oGiffi3i.

fhe

bohds

were

lssued

to

\,.

yleld,lOo,'o

a

year.

The

bond

proceeds

were'P1,902,800.

based

on the

present

values at

ts as follows:

-l

Interest

DUe

.

Pfesent

Value.

at

12/31/06

'

160,000

P

509,000

128,000

435,100

L2l3LlO9

.

,400,000

96,000.

;r

372;5OO

'\

\.

t2l31110

i

400,000

64,000

316,900

12/31/1.1

I

400,000

32,000

1268.30Q

'

g1&02.gQQ

'

Bell

amortlzes

the

boncl

discount

by

lhe

interest

method, In

its

December

31,

2007,

b6lance

'sheet,

at

what

anrount

should

Bell

report the

carrying

value of

the bonds?

P1,393,800'

Pl,{9l,ooo

\Fl;333;333

a.

b.

lnrllhrlo

ol

Profcrsionnl

llcr.loru

unrl

Skllls

l)lvckrDuonl,

ur


13/13

Slm witl

record

on

September

1,

2007,

the first semi-annual

lnterest

payment.dateT

Ioterest

--nJEsq*gxCIadrza

[on

Exoense

P88,335.00

P90;000.00

P83,427.50.,

P85,000.00

20. What ls

the

carrylng

.amount

of the

@rernade?

a.

P1,963,000.00

-

b.

P1,969,820.10

i

-t\

P1,968,658.40

d.

\

P2,ooo,ooo.oo

obllgatlon.

Notes Payable

Accrued

lnterest

Payable

b.

,

P1,000,000

\.

Pt,5o0,0oo

d.

P2,500,000

P3,335.00

'

t

,

P5,000.00

PL,762,50

)

----

Liabilities Quiz (2)

Documents

Transcript of Liabilities Quiz (2)