Problem 1

Period 1 Period 2
(a) Estimated Liability for Premiums 6,600
Premium Expense [(340,000 ÷ 100) × (P8.00 – P5)] 10,200.00 18,900
Cash (340,000 ÷ 100) × P5 17,000 42,500
Inventory of Premium Posters and CDs 27,200 68,000
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(b) Premium Expense 6,600* 1,260
Estimated Liability for Premiums 6,600 1,260
*[(700,000 × .80) – 340,000] ÷ 100 × P3.00
Problem 2
1. P 143,000
2. P300,000
3. P3,938,000
4. P1,960,000
1. P300,000 note payable to bank 8,000.00 [P300,000 x 8% x 4/12]
Mortgage note payable - 10% 15,000.00 [P600,000 x 10% x 3/12]
Mortgage note payable - 12% 120,000.00 [P,500,000 x 12% x 8/12]
Interest Payable 143,000.00
2. Note Payable to bank - payable on demand 300,000.00
P500,000 non current because it was refinanced on a long term basis as of December 31, 2010
3. Accounts payable 650,000.00
Notes payable - trade 190,000.00
Notes payable - bank 300,000.00
Wages and salaries payable 15,000.00
Interest Payable 143,000.00
Mortgage note payable - 10% 600,000.00 [with breach]
Mortgage note payable - 12% 40,000.00 [P220,000-P180,000]
Bonds payable, due 7/1/11 2,000,000.00
Total current liabilities, 12/31/10 3,938,000.00
4. Notes payable - bank 500,000.00
Mortgage note payable - 12% 1,460,000.00 [P1,500,000-40,000]
Total noncurrent liabilities, 12/31/10 1,960,000.00
Problem 3
P135,000
Total estimated mugs to be issued 7,500.00 [(300,000 x 50%)/20]
Mugs issued (4,500.00)
Balance 3,000.00
Premium cost (P360,000/8,000) 45.00
Estimated Premium liability 12/31/10 135,000.00
Problem 4
expense P400,000
liability P260,000 [400,000-140,000]