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Notes payable:

Arising from purchase of goods


Arising from 5 year bank loans, on which a securities valued at P600,000 have
been pledge as security, P400,000 due on June 30, 2016; P100,000 due on
December 31, 2016.
Arising from advances by officers, due June 30, 2016
Reserve for general contingencies
Employees income tax withheld
Advances received from customers on purchase orders
Containers deposit
Accounts payable arising from purchase of goods, net of debit balances of
P30,000
Accounts receivable, net of credit balances of P40,000
Cash dividends payable
Share dividend payable
Dividend in arrears on preference shares
Convertible bonds, due January 31, 2017
First mortgage on serial bonds, payable in semi-annual installments of P50,000,
due April 1 and October 1 of each year.
Overdraft with MIRS bank
Cash in bank balance with BDO
Estimated liability for damages
Estimated liability on meeting guaranteed for service requirements on
merchandise sold
Estimated liability for premiums
Deferred revenue
Accrued interest on bonds payable
Share warrants outstanding
Share options outstanding
Unused letter of credit
Notes receivable discounted
Current Non current

504,000 504,000

700,000
700,000
90,000 90,000
450,000 - -
50,000 50,000
84,000 84,000 -
80,000 80,000

220,000
250,000
360,000 40,000
80,000 80,000
100,000 -
200,000 - -
1,500,000 1,500,000

2,000,000
100,000 1,900,000
90,000 90,000
390,000 -
160,000 160,000

120,000
120,000
75,000 75,000
87,000 87,000
360,000 360,000
120,000 -
210,000 -
400,000 -
200,000 -
2,783,000 3,487,000
Notes payable in letter c.
10,000 + (30,000 x 10%) x (1.16)^-1 11,207
10,000 + (20,000 x 10%) x (1.16)^-2 8,918
10,000 + (10,000 x 10%) x (1.16)^-3 7,047
TOTAL 27,172

Current portion (18,520 - 9,483) 9,037

Interest payable:
Notes payable 1 (25,000 x 12% x 10/12) 2,500

Warranty:
2012 balance 88,200
Warranty expense
Sales (2013 - 2015) 2,300,000
percentage (3 + 5 + 7) 15% 345,000
Actual expenditures
(62K + 82K + 85K) (229,000)
2015 balance 204,200

Premiums:
2014 Sales 4,000,000
expected to redeem 70%
expected to redeem 2,800,000
coupon needed 500 5,600
Actual redemption (1.8M / 500) 3,600
Ending balance 2014 2,000
2015 Sales 4,400,000
expected to redeem 70%
expected to redeem 3,080,000
coupon needed 500 6,160
Total 8,160
Actual redemption (2.8M / 500) 5,600
Ending in units 2,560
Cost 30
Ending liability 76,800

Liability for damages 90,000


Liability for litigation 60,000
Total provision 150,000
Notes payable 9,037
Interest on notes 2,500
Warranty 204,200
Premium 76,800
Provision for damages 150,000
Total 442,537
Payment NI EI Amort.
1/1/2015 27,172
12/31/2015 10,000 3,000 4,348 1,348 18,520
12/31/2016 10,000 2,000 2,963 963 9,483
12/31/2017 10,000 1,000 1,517 517 -

Loss on damages 90,000


Loss on litigation 60,000
Liability on damages 90,000
Liability on litigation 60,000
Warranty expense (5,400,000 x 2%)

Question No. 2

Estimated liability from warranties, beg


Add warranty expense for 2016
Total
Less actual expenditures for 2016
Estimated liability from warranties, 12/31/16

Question No. 3

Premium expense [(1,800,000 x 60%)/200 x P14]

Question No. 4

Inventory of premium, 1/1/16


Add premium purchases (6,500 x P34)
Total premium available
Less premiums issued (1,200,000/200 x P34)
Inventory of premium, 12/31/16

Question No. 5

Estimated premium claims outstanding, 1/1/16


Add premium expense for 2006
Total
Less premiums issued (1,200,000/200 x P14)
Estimated premium claims outstanding, 12/31/06
108,000

136,000
108,000
244,000
164,000
80,000

75,600

39,950
221,000
260,950
204,000
56,950

44,800
75,600
120,400
84,000
36,400
*which was entered in the Purchase Journal in January 2017, CHANGE 2017 TO 2018.

Trade creditors, credit balances 1,363,000


Purchases 12/12 45,000
Undelivered check 63,000
Goods in transit 6,000
Adjusted balance 1,477,000

Purchases 12/12 45,000


Goods in transit 6,000
Total adjustments 51,000

Miscellaneous expense 18,000


Accounts receivable (suuplier with debit balances) 21,000
Advances to supplier 24,000
Accounts payable 63000
ANGE 2017 TO 2018.
Note payable bank - 8% (300,000 x 8% x 4/12) 8,000
Mortgage 10% (600,000 x 10% x 3/12) 15,000
Mortgage 12% (180,000 x 8/12) 120,000
Total interest payable 143,000

Current Non current


Accounts payable 650,000
Notes payable – trade 190,000
Notes payable – bank 300,000 500,000
Wages and salaries payable 15,000
Interest payable 143,000
Mortgage notes payable – 10% 600,000
Mortgage notes payable – 12% 40,000 1,460,000
Bonds Payable 2,000,000
Total 3,938,000 1,960,000
CASE 6

Face Value of note 4,000,000


Discount recorded (160,442)
Recorded amount 3,839,558

Payment NI (10%) EI (12%) Amort CV


1/1/17 3,839,558
12/31/17 1,000,000 400,000 460,747 60,747 2,900,305
12/31/18 1,000,000 300,000 348,037 48,037 1,948,342
12/31/19 1,000,000 200,000 233,801 33,801 982,143
12/31/20 1,000,000 100,000 117,857 17,857 (0)

Face value 12/31/19 1,000,000


Unamortized disc 17,857
CV 12/31/19 982,143

NI 2020 100,000
Disc amort 17,857
Effective interest 2020 117,857
CV 12/31/19 982,143
Effective interest rate 12%

2017
Notes payable 1,000,000
Interest expense 460,747
Cash 1,400,000
Disc on notes payable 60,747

2018
Notes payable 1,000,000
Interest expense 348,037
Cash 1,300,000
Disc on notes payable 48,037
CASE 7
CASE 8

Notes payable: Current


· Arising from purchase of goods P340,000 340,000
· Arising from 3 year bank loans, on which a
securities valued at P1,000,000 have been pledge as
800,000
security, P500,000 note and another P300,000 due on
December 31, 2017. (Note 1) 500,000
Arising from advances by officers 50,000
Accounts payable, net of debit balances of P200,000 (Note 2) 3,160,000 3,538,900
Accrued payroll (Note 3) 240,000 240,000
Phil health, and PAG-IBIG payable 25,000
SSS payable 16,000
Employees income tax withheld 25,000
Containers deposit 80,000 80,000
Accounts receivable, net of credit balances from customers of P40,000 560,000 40,000
Cash dividends payable 120,000 120,000
Share dividend payable 150,000
Dividend in arrears on preference shares 200,000
Estimated liability for damages 130,000 130,000
Estimated liability for premiums 95,000 95,000
Deferred revenue, expected to settle in February 14, 2017 107,000
Bonds payable 2,000,000
Accrued interest on bonds and notes 45,000 45,000
Share warrants outstanding 120,000
Share options outstanding 210,000
Unused letter of credit 500,000
Notes receivable discounted 250,000

Accrued interest on note 1 (500,000 x 15% x 2/12) 12,500


Income tax payable (1,050,000 x 30%) 315,000
5,456,400
Noncurrent

300,000
50,000

107,000
2,000,000

2,457,000
CASE 9

Percentage of Total
Percentage Estimated Estimated
of Total Returns Sub- Returns Sub-
Estimated Estimated sequent to sequent to
Month Sales Returns Returns 6/30/2013 6/30/2013
January P4,200,000 7% P294,000 10% P29,400
February 4,700,000 7 329,000 20 65,800
March 3,900,000 7 273,000 30 81,900
April 3,250,000 7 227,500 50 113,750
May 2,400,000 10 240,000 70 168,000
June 1,900,000 10 190,000 100 190,000
P1,553,500 P648,850

*Estimated loss on component replacement (in percentage of sales price):

Cost of unit replacement 70%


Add freight charges on re 5
75%
Deduct salvage value of c 10
Net loss on components re 65%

Adjusting Entry

Warranty Expense 301,353


Estimated Liability for Product Warranty 301,353
Required liability balance 421,753
Less balance 120,400
Required adjustment to liability 301,353
\
Unadjusted AP 2,720,000
120,000
96,000
48,000
16,800
(80,000)
Adjsuted AP 2,920,800

B = 10% (4,800,000 - B )
B = 480,000 - .1B
.9B = 480,000
B= 533,333

Premium expense:
Packages sold 80,000
70%
56,000
Needed 5
Units 11,200
net cost 90
Premium expense 1,008,000
Redeemed
(32,000 / 5) x 90 576,000
Liability end 432,000

Current liabilities:
AP 2,920,800
Payroll 388,000
Litigation 1,250,000
Bonus 533,333
Notes 400,000
Purcahse commitment 96,000
Premium liabilty 432,000
Due to bumbey 640,000
Total 6,660,133
Accrued interest:
2,100,000 x 15% x 9/12 236,250 236,250
2,000,000 x 12% x 6/12 120,000 120,000
Total 356,250 356,250

Interest expense:
2,800,000 x 3/12 x 15% 105,000 210,000
2,100,000 x 15% x 9/12 236,250 472,500
430,000 x 14% 60,200 60,200
11,774,000 x 12% x 6/12 106,440 106,440
Total 507,890 849,140

Current Non current


Accrued interest 356,250 356,250 -
Notes payable 700,000 1,400,000 1,400,000 2,800,000
FLO 45,372 344,828 45,372 344,828
Deferred tax 36,000 36,000
Bonds payable 1,780,440 1,780,440
DTL
Total 1,101,622 3,561,268 1,801,622 4,961,268
-
CASE 12

Warranty expense (1,200 x 1,500) 1,800,000


Actual cost (850,000)
Warranty liability 950,000

Sales 12,000,000
% to redeem 40%
Sales subj to liab. 4,800,000
coupons 400
Units 12,000
Net liab cost 250
Premium expense 3,000,000
Actual redemption
(500,000 / 400) x 250 (312,500)
Premium liability 2,687,500

1.6M x 20% 320,000


2M x 50% 1,000,000
2.4M x 30% 720,000
Provision for litigation 2,040,000

Restructuring provision (330,000 + 150,000) 480,000


P/L OCI PA/PL FPA DBO
Beginning balances 15,000,000 50,625,000 35,625,000
Service cost:
Past 800,000 (800,000) 800,000
Current 5,400,000 (5,400,000) 5,400,000
Interest cost - net
Interest expense 1,900,000 (1,900,000) 1,900,000
Interest income (2,700,000) 2,700,000 2,700,000
Re-measurement
FPA - 200,000 (200,000) (200,000)
DBO - gain (800,000) 800,000 (800,000)
Contribution to the plan 3,000,000 3,000,000
benefits paid (4,400,000) (4,400,000)
5,400,000 (600,000) 13,200,000 51,725,000 38,525,000

Interest expense 1,900,000


Interest income 2,700,000
Net interest income 800,000
Beginning pension asset 15,000,000
Discount arte 5.3333%
BEFORE
2013 salary 1,000,000
Future value factor (1.05^4) 1.215506
Future salary 1,215,506
Annual benefit 1%
Expected benefit 12,155.06
Probability 80%
Expected liability 9,724
PV factor 0.683013
DBO 12/31/13 6,642
Interest cost (6,642 x 10%) 664
Current service cost (9,724 x 0.751315) 7,306
DBO 12/31/14 14,612

DBO 12/31/14 - after 21,596


DBO 12/31/14 - before 14,612
Amount in OCI 6,985
AFTER
2014 - salary 1,050,000
Future value factor (1.15^3) 1.520875
Future salary 1,596,919
Annual benefit 1%
Expected benefit 15,969.19
Probability 90%
Expected liability 14,372
Years (13 and 14) 2
For two years 28,745
PV factor 0.751315
DBO 12/31/14 21,596
Fair value of the asset at inception of the lease 1,500,000
PV of residual value 40,388
PV of future rentals 1,459,612
PV factor of 12% 4.967640
Annual payment 293,824

Payment Principal Interest


1/1/15
12/31/15 293,824 118,671 175,153
12/31/16 293,824 132,911 160,913
12/31/17 293,824 148,860 144,964
12/31/18 293,824 166,724 127,100
12/31/19 293,824 186,730 107,094
12/31/20 293,824 209,138 84,686
12/31/21 293,824 234,235 59,589
12/31/22 293,824 262,343 31,481

Gross investmet in the lease


(293,824 x 8) + 100,000 2,450,592
Net investment
PV of rentals (293,824 x 4.967640) 1,459,612
PV of residual value 40,388 1,500,000
Unearned interest income 950,592

Sales 1,459,612
Cost of sales
(1,000,000 - 40,388) 959,612
Gross profit 500,000

P/L OCI PA/PL


Beginning balances (1,000,000)
Service cost:
Past 2,000,000 (2,000,000)
Current 1,000,000 (1,000,000)
Interest cost - net
Interest expense 600,000 (600,000)
Interest income (540,000) 540,000
Re-measurement
FPA - gain (90,000) 90,000
DBO - loss 800,000 (800,000)
Contribution to the plan 5,000,000
Gain on settlement (500,000) 500,000
benefits paid
2,560,000 710,000 730,000

Benefit expense 2,560,000


OCI - loss 710,000
Pension asset 1,230,000
Cash 5,000,000
CV
1,459,612
1,340,941
1,208,030
1,059,170
892,446
705,716
496,578
262,343
0

FPA DBO
9,000,000 10,000,000

2,000,000
1,000,000

600,000
540,000

90,000
800,000
5,000,000
(500,000)
(2,450,000) (2,450,000)
12,180,000 11,450,000
CASE 16