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Chapter 1 - Current Liabilities, Provisions, and Contingencies
Chapter 1 - Current Liabilities, Provisions, and Contingencies
PROBLEMS
19 Purchases 72,000
Accounts Payable – Celeron Corporation 72,000
19 Purchases 69,840
Accounts Payable – Celeron Corporation 69,840
(b)
Dec. 31 Purchase Discounts Lost 720
Accounts Payable – Celeron Corporation 720
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Chapter 1 – Current Liabilities, Provisions and Contingencies
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Chapter 1 – Current Liabilities, Provisions and Contingencies
No obligation is recognized for the suit filed in September 2013 nor for the suit filed
in October. However, disclosure is necessary in the notes to the financial statements
for the suit filed in October 2013 by Pasig City government since it is reasonably
possible the Pasig City government will be successful.
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Chapter 1 – Current Liabilities, Provisions and Contingencies
(b)
Liability as of 12/31/12 (100,000 – 27,778) P 72,222
Liability as of 12/31/13 (100,000 – 63,158) P 36,842
Note: The gift certificates estimated to expire will be recognized as revenue at the
date of actual expiration.
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Chapter 1 – Current Liabilities, Provisions and Contingencies
Unearned Service Contract Revenue at December 31, 2013 may also be computed as:
720,000 x 65% 468,000
864,000 x 20% x ½ 86,400
864,000 x 80% 691,200
Total 1,245,600
(c) 2012 2013
Revenue from service contracts P72,000 P266,400
Cost of service contracts 25,000 100,000
Profit from service contracts P47,000 P166,400
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Chapter 1 – Current Liabilities, Provisions and Contingencies
(b) 2012
Cash 5,500,000
Unearned Subscription Revenue 5,500,000
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Chapter 1 – Current Liabilities, Provisions and Contingencies
b. B = 8% (8000,000 – B )
B = 640,000 - .08B
B = 640,000/1.08 = 592,593
c. B = .08 (8,000,000 – T )
T = .30 (8,000,000 – B )
B = .08 {8,000,000 - .30 (8,000,000 – B ) }
B = .08 {8,000,000 – 2,400,000 + .30B}
B = 448,000 + .024B
B = 448,000/0.976 = 459,016
d. B = .08 {8,000,000 – B – T }
T = .30 (8,000,000 – B)
B = .08{8,000,000 – B - .30 (8,000,000 – B)}
B = .08 {8,000,000 – B – 2,400,000 + .30B}
B = 448,000 - .056B
B = 448,000/1.056 = 424,242
c. B = .32 {3,000,000 – B }
B = 960,000 - .32B
B = 960,000/1.32 = 727,273 (total)
B (Sales Manager): 727,273 x 12/32 = 272,727
B (Each Sales Agent): 727,273 x 10/32 = 227,273
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Chapter 1 – Current Liabilities, Provisions and Contingencies
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Chapter 1 – Current Liabilities, Provisions and Contingencies
Theory
MC1 D MC11 D
MC2 B MC12 B
MC3 C MC13 D
MC4 B MC14 B
MC5 B MC15 B
MC6 A MC16 A
MC7 B MC17 B
MC8 C MC18 A
MC9 C MC19 B
MC10 C MC20 C
MC21 D
MC22 D
Problems
MC23 D 540,000 + 30,000 + 15,000 = 585,000
MC24 C 100,000 + (100,000 x 0.3 x 9/12) = 102,250 x .944 = 96,524
MC25 A Proceeds = 100% - 10% = 90% ; Effective interest = 10%/90% = 11.11%
MC26 D P5,000,000, which is the reasonable estimate
MC27 C Given
MC28 A 130,000 + 1,630,000 – 1,560,000 = 200,000
MC29 D 6% ( 4,500,000-2,500,000) = 120,000 + (8,500 x ½ ) + 2,500 = 126,750
MC30 D 1,080,000 + 1,920,000 – 1,560,000 = 1,440,000
MC31 C [(67.5% x 2,100,000] + 92.5%(2,730,000) = 3,942,750
MC32 C [½ (15% + 35%) x P2,100,000] + (1/2 x 15% x 2,730,000) = 729,750
MC33 A ½ (15% + 35%) x P2,730,000 = 682,500
MC34 A (25% x 2,100,000)+(67.5% x 2,730,000)+(92.5% x 2,475,000) = 4,657,125
MC35 D 1,000 x 750 = 750,000
MC36 B 63,000 + (1,125,000 x 3/10) = 400,500
MC37 B {(500,000 x 80%) – 300,000} = 100,000; 100,000 x (50+5-40) = 1,500,000
MC38 A { (3,000,000 x 60%) / 10 } – 42,000 = 138,000; 138,000 x P0.50 = 69,000
MC39 A (400,000 x 70%) – 100,000 = 180,000 ; ( 180,000 /5) x 20 = 720,000
MC40 B (720,000 x 50%) – 300,000 = 60,000
MC41 D 24,000 x 300 = 7,200,000
MC42 C 7,200,000 – 1,700,000 = 5,500,000
MC43 D 1,500,000 x 4% = 60,000
MC44 C B = 0.45 {2,000,000 – B - .30 (2,000,000 – B}) ; B = 479,087
MC45 C Total B = 0.35 {2,000,000 – B} ; total B = 518,519
B to Sales Manager = 518,519 x 15/35 = 222,222
B to Each Sales Agent = 518,519 x 10/35 = 148,148
MC46 B B = 0.10 {2,500,000 - .30 (2,500,000 – B)} = 180,412
MC47 C 600,000 + 900,000 + 400,000 = 1,900,000
MC48 A 2,400,000 – 1,900,000 = 500,000
MC49 D 3,800,000 + 2,000,000 – 5,000,000 = 800,000 decrease in profit
MC50 A 472,000+200,000+9,600+64,000+380,000+26,000+100,000+50,000+
24,000+48,000+57,500= 1,431,100
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