Reference no: EM133050979

Question - INTERMEDIATE ACCOUNTING -

Q1) GSM Corp's accounts payable at December 31, 2021, totaled P1,600,000 before any necessary year-end adjustments relating to the following transactions:

a. On December 27, 2021, GSM wrote and recorded checks to creditors totaling P700,000 causing an overdraft of P200,000 in GSM's bank account at December 31, 2021. The checks were mailed out on January 10, 2022.

b. On December 28, 2021, G9y purchased and received goods for P300,000, terms 2/10, n/30. GSM records purchases and accounts payable at net amounts. The invoice was recorded and paid January 2, 2022.

c. Goods shipped FOB destination on December 20, 2021 from a vendor was received January 2, 2022. The invoice price was P130,000.

At December 31, 2021, what amount should GSM report as total accounts payable?

Q2) Gladness Co., guaranteed a loan of P400,000 granted to Timothy C. At the date when the directors approved the financial statements of Timothy, there is no reason to believe that the guarantee will be invoked.

Assuming that the amount of the guarantee is a material amount for Gladness Co., how much shall be the provision?

Q3) Milder Company has guaranteed a loan of P300,000 granted to Miller Company. After the balance sheet date of Milder Company but before the directors approved the financial statements, Milder Company receives notice that Miller Company is in liquidation and the creditor of Miller will invoke the guarantee. How much shall be the provision for liability?