CERCADO, Geran Kearn L.

ACC 221 2:15-4:15PM April 8, 2021

BSA-2
Current Liabilities

A. TYLER CORPORATION
a. Premium Inventory 225,000
Cash 225,000
To record purchase of premiums
b. Premium Expense 100,000
Cash 50,000
Premium Inventory 150,000
To record redemption of premiums
c. Premium Expense 300,000
Estimated liability for premiums outstanding 300,000
(40% x 1,000,000) /100 = 4,000
(4,000-1,000) x 100 = 300,00
To record year-end adjustments
B. FILLMORE COMPANY
a. 2015 2016
Warranty Liability, Jan. 1 P 0 P 187,200
Warranty Expense (8% x 4,200,000) / (8% x 336,000 556,800
6,960,000)
Actual Repair Costs incurred (148,800) (180,000)
Warranty Liability, Dec. 31 P 187,200 P 564,000

b.
On 2015 sales (4,200,000 x 5% x 1/2) P 105,000
On 2016 sales [(1/2 of 3%) + 5%] x 6,960,000 452,400
Predicted warranty liability at Dec. 31, 2016 P 557,400
C. BUCHANAN COMPANY

Cash 3,000,000
Unearned Revenue from Gift Certificates Outstanding 3,000,000

Unearned Revenue from Gift Certificates 2,750,000

Sales 2,750,000

Unearned Revenue from Gift Certificates Outstanding 150,000

Revenue from Forfeited Gift Certificates 150,000