Reference no: EM132933017
Questions -
Q1) Hamilton sells gift certificates that expire three years after their issuance. Information for this transaction is below:
Gift certificates sold during the current year- P1,000,000
Prior year gift certificates redeemed in the current year- P400,000
Gift certificates sold and redeemed in the current year- P700,000
Hamilton's experience indicates 10% of GC's sold will not be redeemed.
How much is the unearned revenue at the end of the current year?
A. P400,000
B. P200,000
C. P500,000
D. P600,000
Q2) CV Company started business in 2020. It sells printers with a three-year warranty. CV estimates its warranty cost as a percentage of peso sales. Based on past experience, it is estimated that 2% will be repaired during the first year of warranty, 4% will be repaired during the second year, and 6% will be repaired during the third year of warranty.
In 2020 and 2021, the company was able to sell 7,500 units and 8,400 units respectively at a selling price of P5,000 per unit. The company incurred actual repair costs of P530,000 and P1,176,000 in 2020 and 2021 respectively.
Assuming that sales and repairs occur evenly throughout the period, how much of the 2020 and 2021 sales are still under warranty on December 31, 2021?
A. P6,450,000
B. P7,620,000
C. P8,790,000
D. P7,834,000
Q3) On July 1, 2021, BTS Company leased a delivery truck from BTS Company under a four-year operating lease. Total rent for the term of the lease will be P2,700,000, payable as follows: First 6 months at P120,000 per month; next 18 months at P60,000 per month; next 12 months at P50,000 per month; last 12 months at P25,000 per month.
What is the amount reported in BTS's balance sheet on December 31, 2021 as a result of the lease?
A. Rent receivable of P382,500
B. Unearned rent of P405,000
C. Unearned rent of P382,500
D. Rent receivable of P405,000
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