Reference no: EM133176085
Question 1 - On September 30, 2022, R Company borrowed P1,000,000 on a 9% note payable. The entity paid the first of four quarterly payments of P264,200 when due on December 31, 2022.
1. What amount should be reported as interest expense for 2022?
a. 67,500 c. 90,000
b. 30,000 d. 22,500
2. On December 31, 2022, what is the carrying amount of the note payable?
a. 825,800 c. 735,800
b. 758,300 d. 750,000
Question 2 - L Company estimated the annual warranty expense at 2% of annual net sales. The net sales for the current year amounted to P4,000,000.
On January 1, the warranty liability was P60,000 and the warranty payments during the current year totaled P50,000.
1. What amount should be reported as warranty expense for the current year?
a. 80,000 c. 70,000
b. 60,000 d. 50,000
2. What amount should be reported as warranty liability at year-end?
a. 80,000 c. 10,000
b. 90,000 d. 70,000
Question 3 - Y Company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount of purchases. Program members can redeem the points for further purchases. The points have no expiry date.
During 2021, the customer earned 60,000 points. Management expects that 100% of these points will be redeemed. The stand-alone selling price of each loyalty point is P20. The sales during 2021 amounted to P6,800,000 based on stand-alone selling price.
On December 31, 2021, 28,800 points have been redeemed in exchange for purchases. In 2022, the management revised expectations and now expects 90% of the points to be redeemed. In 2022, the entity redeemed 9,000 points.
1. What amount of the transaction price should be allocated to the points?
a. 1,020,000 c. 1,800,000
b. 0 d. 1,200,000
2. What amount should be reported as revenue earned from loyalty points for 2021?
a. 510,000 c. 576,000
b. 0 d. 489,600
3. What amount should be reported as revenue earned from loyalty points for 2022?
a. 714,000 c. 0
b. 224,400 d. 170,000
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