Case 7 You were able to obtain the following from the accountant of

Tuguegarao Company related to the company's liabilities as of 1

December 31, 2018:

Current liabilties:
Accounts payable 1,350,000
14% note payable issued October 1, 2017, maturing
September 30, 2019 1,250,000 2
16% note payable issued April 1, 2016, due on
April 2019 3,000,000
Interest payable ?
Noncurrent liability:
10% 2-year, note payable issued on July 1, 2018 2,000,000

The following additional information pertains to these liabilities:

a. The accounts payable balance of 1,350,000 was before any
necessary year-end adjustments relating to the following:
a1. Goods were in transit to Tuguegarao from a vendor on
December 31, 2018. The invoice cost was P75,000. The
goods were shipped FOB shipping point on Dec. 29, 2018
and were received on January 2, 2019.
a2. Goods shipped FOB destination on December 21, 2018, from 3
a vendor to Tuguegarao, were received on January 6, 2019.
The invoice cost was P37,500.
a3. On December 27, 2018, Tuguerarao wrote and recorded
checks totaling P60,000 which were mailed on Jan. 10, 2019.
b. The interest of the 14% note payable is payable every September 30.
c. On December 31, 2018, the company expects to refinance the P3M 4
note by the issuance of a long-term note payable in lump sum. The
refinancing of the P3M is at the discretion of the enterprise. Tuguegarao's
December 31, 2018 financial statements were issued on March 31, 2019.
On January 15, 2019, the entire P3M balance of the 16% note was
refinanced by the issuance of a long-term obligation payable. The interest
is payable every April 1. 5
d. The note payable of P2,000,000 is payable to Baggao Corporation. The
interest is payable quarterly. The existing loan agreement does not
carry a provision to refinance. During September, Tuguegarao was
experiencing financial difficulty and was unable to pay the periodic
interest. Baggao Company agreed at the reporting date to provide
a grace period ending at least twelve months to rectify the breach.

1. Accounts payable in the Dec. 31, 2018 SOFP.

2. Total interest expense for the year 2018.
3. Total interest payable as of December 31, 2018.
4. Total current liablities as of Dec. 31, 2018.
5. Total noncurrent liabilties as of Dec. 31, 2018.
 SOLUTIONS
A/P 1,350,000
Good were in transit Shipped FOB shi 75,000
Unmailed checks 60,000
A/P, 12/31/18 1,485,000

14% 2 yrs
9/30/18 131,250
12/31/18 43,750 175000

16% 3 yrs
1/4/2018 120,000
12/31/18 360,000 480,000

10% 2 yrs
9/31/18 50,000
12/31/18 50,000 100,000
Interest Expense 12/31/18 755,000

14% N/P 43,750

16% N/P 360,000
10% N/P 100,000
Interest Expense 12/31/18 503,750

A/P 1,485,000
I/P 503,750
14% N/P 1,250,000
Current Liabilities 12/31/18 3,238,750

16% N/P issued in 4/1/16 due on 4/19 3,000,000

10% 2 yr, N/P issued on 7/1/18 2,000,000
Noncurrent Liabilities 12/31/18 5,000,000