Professional Documents
Culture Documents
On December 31, 2015, records show that 925 days vacation and sick leaves carried over from the last
operating period were exercised and paid in 2015. In addition, there are 30 employees who have 6
weeks jccumulated unused sick leaves and vacation leaves combined; 25 employees who have
accumulated 3 weeks unused sick leaves and 2 weeks unused vacation leaves ; 30 employees who have
accumulated 3 weeks unused sick leaves and vacation leaves combined; 10 employees who have
accumulated 1 week unused sick leaves and 1 week unused vacation leaves. Employees had an average
daily wage rate of P275 for a 5-day weekly operation in 2015'
7. How much liability for compt:nsated absences should be included as current liabilities as of
December 31, 2014?
a. 57A,625. b. 453,750 c. 412,500 d. 337,500
B. How much liability for compensated absences should be included as current liabilities as of
December 31, 2015?
a. 570,625 b. 453,750 c. 412,500 d. 337,500
eBAELEUS CUMMINGS INC. manufactures and sells air conditioning units with a 12 month warranty
under which defective air conditioning units will be replaced free of any charges.
The company started out in 2014 expecting 10o/o of the sales to be returned, However, due to the
innovations and improvements made to the products during the year, the estimated percentage of
returns increased to 15o,/o on July :1. It is assumed that no units sold during a given quarter are returned
in that quarter. Each unit is stamped with a date at tirne of sale so that the warranty may be properly
administered. The following table of percentages indicates the pattem of sales return during the 12-
month period of warranty, starting with the guarter following the sale of air conditioning units.
Requirements:
9. What is the total estimated returns for the year ended December 31, 2014?
a.5,115,000 b. 6,120,000 c. 6,300,000 d. 7,672,500
10. What is the warranty expense for the year ended December 3L, 2OL4?
a. 4,590,000 b. 4.896,000 c. 5,508,000 d. 6,120,000
11. What is the estimated warranties payable as of December 31, 2AL4?
a. 2,1.76,875 b. 2,205,900 c. 2,3.22,0OO d. 2,612,250
pROBLEM 6: Mountain Province Home Depot carries a wide variety of promotion techniques to attract
customers.
Kitchen and home appliances are sold in a one-year warranty for replacement of parts and labor. The
estimated warranty cost, based on past experience, is 5olo of sales.
The premium is offered on the home furniture. Customer receive a coupon for each peso spent on home
furniture. Customers may exchange 2,000 coupons and P50 for a rice cooker which the company
purchased at P340 for each rice cooker and estimates that 6o0/o of the coupons given to customers will be
redeemed.
The company's total sales for 2014 were P775.2M - P86.4M from kitchen and home appliances and
P28.8t4 from home furniture. Replacement pafts and labor for warranty work totaled P2.624M during