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What amount should Jan report as escrow accounts liability

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Reference no: EM133062801

Question 1 - Jan Company, a division of National Realty Corporation, maintains escrow accounts and pays real estate taxes for National's mortgage customers. Escrow funds are kept in interest-bearing accounts. Interest, less a 10% service fee, is credited to the mortgagee's account and used to reduce future escrow payments. Additional information follows:

Escrow accounts liabilities, 1/1/2021

P700,000

Escrow payments received during 2021

1,580,000

Real estate taxes paid during 2021

1,720,000

Interest on escrow funds during 2021

50,000

Required - What amount should Jan report as escrow accounts liability in its December 31, 2021 balance sheet?

a. P510,000

b. P515,000

c. P605,000

d. P610,000

Question 2 - Chryzza Department Store sells gift certificates that are redeemable only when the merchandise is purchased from its stores. It is the company's policy to recognize the amount redeemed as realized. During 2021, Chryzza Department Store sold gift certificates amounting to P1,800,000 and redeemed gift certificates worth P1,560,000. Gift certificates outstanding at January 1, 2021 is P520,000. The company's gross profit rate is 40%.

Required - What is the liability for outstanding gift certificates at December 31, 2021?

a. P760,000

b. P720,000

c. P680,000

d. P520,000

Reference no: EM133062801

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