Reference no: EM132937661

Questions -

Q1. On January 1, 2019, Damira Company acquired machinery by issuing a 3-year, 3%, P4,000,000 note payable. Principal is due on January 1, 2022 but the interest are to be paid annually starting January 1, 2020. The prevailing interest rate for this type of note is 12%. How much is the carrying amount of the note on initial recognition?

Q2. On January 1, 2019, Julie Company issued 3-year bonds with face amount of P5,000,000 at 98. Additionally, Julie Company paid bond issue cost of P140,000. The nominal rate is 10% and the effective rate is 12%. The interest is payable annually on December 31. The effective interest method is used in amortizing discount and issue cost. What amount of discount is amortized for the year ended December 31, 2019?

Q3. On December 31, 2021 Turtle Company has a P4,000,000 note payable on demand. However, on December 31, 2021, there is no indication that the payee on the note will demand payment over the next 12 months. How much is the current liability in relation to the note in Turtle's 2021 year-end financial statements?

Q4. The balance in Raspberry Company's account payable at December 31, 2019, was P1,100,000 before considering the following information:

-Goods shipped from FOB shipping point on December 20, 2019, from a vendor to Raspberry were lost in transit. The invoice cost of P20,000 was not recorded by Raspberry. On January 6, 2020, Raspberry filed a P20,000 claims against common carrier.

-On December 27, 2019, a vendor authorized Raspberry to return, for full credit, goods shipped and billed at P35,000 on December 2, 2019. The returned goods were shipped by Raspberry on December 27, 2019. A P35,000 credit memo was received and recorded by Raspberry on January 6, 2020.

What amount should Raspberry report as accounts payable in its December 31, 2019, statement of financial position?

Q5. On January 1, 2019, Ramram Company acquired machinery by issuing a 3-year, 3%, P4,000,000 note payable. Principal is due on January 1, 2022 but the interest are to be paid annually starting January 1, 2020. The prevailing interest rate for this type of note is 12%. How much is the carrying amount of the note on December 31, 2019?

Q6. On March 1, 2021, Ellen Company issued 5,000 of P1,000 face value bonds at 110 plus accrued interest. The entity paid bond issue cost of P300,000. The bonds were dated November 1, 2020, mature on November 1, 2030, and bear interest at 12% payable semiannually on May 1 and November 1. What net amount was received from the bond issuance on March 1, 2021?

Q7. Leon Company requires advance payments with special order for machinery constructed to customer specifications. These advances are nonrefundable. The entity provided the following information for the current year:

Advances from customers - beginning of year 1,100,000

Advances receive with orders 1,800,000

Advances applied to orders shipped 1,600,000

Advances applicable to orders cancelled 400,000

What amount should be reported as current liability for advances from customers at year-end?

Q8. In its statement of comprehensive income for the year ended December 31, 2013, Ethan Company showed bonus expense of P466,428 and income after deducting tax and bonus is P6,196,822. Income tax rate is 35% and bonus is computed as percentage of the income after deducting income tax but before deducting bonus. What was the bonus rate?

Q9. During 2020, Colts Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to sales are 2% within 12 months following the sale and 4% in the second 12 months following the sale. Sales and actual warranty expenditures for the year ended December 31, 2020 and 2021, are as follows:

Sales Actual expenditures

2020 150,000 2,250

2021 250,000 7,500

400,000 9,750

What amount should Colts report as estimated warranty liability in the December 31, 2021, balance sheet?

Q10. During 2021, Haft Company became involved in a tax dispute with the BIR. At December 31, 2021, Haft's tax advisor believed that an unfavorable outcome was probable. A reasonable estimate of additional taxes was P200,000 but could be as much as P300,000. After the 2021 financial statement were issued, Haft received an accepted an BIR settlement offer of P275,000. What amount of accrued liability should Haft have reported in its December 31, 2021 balance sheet?