GALICIA, JESTHER COLEEN

BSA 3102

Proble 2-3 (IAA)

Pop Company

Required: Prepare journal entries to record the transactions relating to the premium plan
year.

1. Cash (400,000 bottles x P9) ₱ 3,600,000

Sales ₱ 3,600,000

2. Premiums 900,000
Cash 900,000

3. Premium Expense 30,000

Cash 30,000

4. Cash (8,000 x 5) 40,000

Premium Expense (8,000 x 85) 680,000
Premiums (8,000 x 90) 720,000

5. Premium Expense (2,000 x 85) 170,000

Estimated premium liability 170,000

Bottle caps to be redeemed (400,000 x 25%) 100,000

Less: Bottle caps redeemed (8,000 pens x 10) 80,000
Bottle caps outstanding 20,000

6. Premium Expense 150,000

Cash (5,000 x 30) 150,000
Problem 2-6 (IFRS)
Anton Company

Required:
1. Compute the stand-alone selling price of the coupons.

No. of free additional product (15,0 ₱ 5,000

Multiply by: Selling Price 500
SP of the Product 2,500,000
Expected Redemption 60%
Stand-alone selling price of coupon ₱ 1,500,000

2. Allocate the transaction price to the products sold and the coupons.

Stand-Alone Fraction Allocated

Product sold 7,500,000 7,500/9,000 6,250,000
Coupons 1,500,000 1,500/9,000 1,250,000
9,000,000 7,500,000

3. Journal entry to record the sales for 2021:

Cash ₱ 7,500,000
Sales ₱ 6,250,000
Deferred Revenue 1,250,000

4. Journal entries to record the delivery of 2,000 free additional boxes in 2022:
Deferred Revenue - Coupons 500,000
Sales 500,000

Stand-Alone selling price of coupon ₱ 1,250,000

Coupons Redeemed
(2,000/5,000*1,250,000) 500,000
Deferred Revenue, Dec. 31, 2022 ₱ 750,000
Problem 2-8 (IFRS)
Nia Company

Required:
1. Compute the stand-alone price of the discount coupons.

Average price of future purchases ₱ 5,000

Multiply by: No. of discount coupons 100
Total amount of future purchases 500,000
Multiply by: Percentage discount 40%
Total discount on future purposes 200,000
Expected Redemption 70%
Stand-alone selling price of coupons ₱ 140,000

2. Allocate the transaction price to the products sold and the discount coupons.

Stand-Alone Fraction Allocated

Product sold 1,860,000 1,860/2,000 1,729,800
Coupons 140,000 140/2,000 130,200
2,000,000 1,860,000

3. To record the sales:

Cash ₱ 1,860,000
Sales ₱ 1,729,800
Deferred Revenue 130,200

4. To record the redemptions of coupons:

Cash 210,000
Deferred revenue 130,200
Sales 340,200

Total Discount for future purposes ₱ 500,000

Less: Discount (40%*500,000) 200,000
Net price 300,000
Expected redemption 70%
Cash received from customers ₱ 210,000
Problem 2-10 (IFRS)
Isabel Company

Required:
1. Compute the stand-alone price of the rebate coupons.

No. of products sold ₱ 10,000

Multiply by: Discount per coupon 20
Total amount of discount 200,000
Expected redemption 80%
Stand-alone selling price of rebate coup ₱160,000

2. Allocate the transaction price between the products sold and the rebate co

Stand-Alone Fraction Allocated

Product sold (10,000*64) 640,000 640/800 512,000
Rebate Coupons 160,000 160/800 128,000
800,000 640,000

3. To record the sales to retailers:

Cash 640,000
Sales 512,000
Rebate Liability 128,000

4. To record the reimbursement to resellers:

Rebate Liability 50,000
Cash 50,000
Problem 2-12 (IFRS)
Shawn Company

Required:
1. Compute the expected value of breakage.
(8,000,000 x 15%) ₱1,200,000

2. Compute the expected value if gift certificates to be redeemed.

(8,000,000 x 85%) ₱6,800,000

3. Compute the breakage revenue.

Value of certificates redeemed ₱ 2,975,000
Divided by: Expected value of certificates to be rede 6,800,000
Multiply by: Expected value of breakage 1,200,000
Breakage Revenue ₱ 525,000

4. To record the sale of gift certificates:

Cash ₱ 8,000,000
Deferred revenue - gift certificates ₱ 8,000,000

To record the value of certificates redeemed:

Deferred revenue - gift certificates 2,975,000
Sales 2,975,000

To record the breakage revenue:

Deferred revenue - gift certificates 525,000
Breakage Revenue 525,000
Problem 2-14 (IFRS)
Erika Company

Required: Prepare journal entries for 2021, 2022, 2023, and 2024.

2021
Cash ₱ 7,000,000
Sales ₱ 6,125,000
Unearned revenue - points 875,000

Unearned revenue - points 328,125

Sales 328,125

Computation:
Points to be redeemed (50,000 x 80%) 40,000

Revenue to be recognized in 2021 (15,000/40,0 x 328,125

8

2022
Unearned revenue - points 144,375
Sales 144,375

Computation:
Points to be redeemed (50,000 x 85%) 42,500

Total points redeemed to 12/31/2022 (15,000 + 7 22,950

Cumulative revenue 12/31/2022 (22,950/42,500 * 8 472,500

Revenue recognized in 2021 - 328,125
Revenue to be recognized in 2022 144,375

2023
Unearned revenue - points 52,500
Sales 52,500

Computation:
 Points to be redeemed (50,000 x 85%) 42,500

Total points redeemed to 12/31/2023 (15,000 + 7,950 + 2 25,500

Cumulative revenue 12/31/2023 (22,950/42,500 * 8 525,000

Revenue recognized in 2022 - 472,500
Revenue to be recognized in 2023 52,500

2024
Unearned revenue - points 262,500
Sales 262,500

Computation:
Points to be redeemed (50,000 x 90%) 45,000

Total points redeemed to 12/31/2024 (15,000 + 7,950 + 2,55 + 1 40,500

Cumulative revenue 12/31/2024 (22,950/42,500 * 875, 787,500

Revenue recognized in 2023 - 525,000
Revenue to be recognized in 2024 262,500
Problem 3-2 (IFRS)
Dare Company

1. Prepare journal entries in connection with the warranty using the expense as incurred approach.
2021
1. Cash ₱ 5,000,000
Sales ₱ 5,000,000

2. Warranty expense 200,000

Cash 200,000

2022
1. Cash 9,000,000
Sales 9,000,000

2. Warranty expense 560,000

Cash 560,000

2. Prepare journal entries in connection with the warranty using the accrual approach.
2021
1. Cash ₱ 5,000,000
Sales ₱ 5,000,000

2. Warranty expense 700,000

Estimated warranty liability (5,000,000 700,000

3. Estimated warrant l 200,000

Cash 200,000

2022
1. Cash 9,000,000
Sales 9,000,000

2. Warranty expense 1,260,000

Estimated w l ( 1,260,000
3. Estimated warrant l 560,000
Cash 560,000

3. Determine the estimated warranty liability on December 31, 2022.

Warranty expense
2021 700,000
2022 1,260,000 1,960,000

Actual warranty repairs

2021 200,000
2022 560,000 760,000
Estimated
4. warranty
Analyze the liability
estimated - Dec.liability
warranty 31, 2022on December 31, 20221,200,000
to
ascertain if adjustment is necessary. The sales and warranty repairs are
made evenly during the year.
Warranty expense related to 2021 sales
2021
First contract year of 1/1/2021 sales (2,500,000*4%) 100,000
First contract year of 7/1/2021 sales (2,500,000*4%*6/12) 50,000

2022
First contract year of 7/1/2021 sales (2,500,000*4%*6/12) 50,000
Second contract year of 1/1/2021 sales (2,500,000*10%) 250,000
Second contract year of 7/1/2021 sales (2,500,000*10%*6/12) 125,000

2023
Second contract year of 7/1/2021 sales (2,500,000*10%*6/12) 125,000

Warranty expense for 2021 700,000

Warranty expense related to 2022 sales

2022
First contract year of 1/1/2022 sales (4,500,000*4%) 180,000
First contract year of 7/1/2022 sales (4,500,000*4%*6/12) 90,000

2023
First contract year of 7/1/2022 sales (4,500,000*4%*6/12) 90,000
Second contract year of 1/1/2022 sales (4,500,000*10%) 450,000
Second contract year of 7/1/2022 sales (4,500,000*10%*6/12) 225,000

2024
Second contract year of 7/1/2022 sales (4,500,000*10%*6/12) 225,000

Warranty expense for 2021 1,260,000

5. Prepare the adjustment to correct the estimated warranty liability on December 31, 2022
2021 sales still under warranty after 12/31/2022
Second contract year of 7/1/2021 sales 125,000

2022 sales still under warranty after 12/31/2022:

First contract year of 7/1/2022 sales 90,000
Second contract year of 1/1/2022 sales 450,000
Second contract year of 7/1/2022 sales 225,000
Estimated warranty liability - 12/31/2022 765,000
Estimated warranty per book 1,200,000
Decrease in warranty liabiltiy - 435,000

Estimated warranty liability 435,000

Warranty expense 435,000
ncurred approach.

l approach.
cember 31, 2022
Problem 3-4 (IAA)
Sony Company

Required:
1. 2020
Cash 9,000,000
Sales (1,000 x P9,000) 9,000,000

Warranty expense 450,000

Estimated warranty liability (1,000 x P450) 450,000

2021
Cash 8,325,000
Sales (900 x P9,250) 8,325,000

Warranty expense 405,000

Estimated warranty liability (900 x P450) 405,000

Estimated warranty liability 180,000

Cash 180,000

2022
Estimated warranty liability (P280,000 + P190,000) 470,000
Cash 470,000

2. Warranty expense related to 2020 sales

2021
First contract year of 12/31/2020 sales (450,000 x 40 180,000

2022
Second contract year of 12/31/2020 sales (450,000 x 6 270,000
Toatl warranty expense for 2020 450,000

Warranty expense related to 2021 sales

2022
First contract year of 12/31/2021 sales (405,000 x 40 162,000
 2023
Second contract year of 12/31/2021 sales (405,000 x 6 243,000
Total warranty expense for 2021 405,000

3. Warranty expense:
2020 450,000
2021 405,000 855,000

Actual warranty repairs:

2020 -
2021 180,000
2022 470,000 650,000
Estimated warranty liability - December 31, 2021 205,000

2020 sales still under warranty after 12/31/2022 -

2021 sales still under warranty after 12/31/2022:
Second contract year of 12/31/2021 sales 243,000
Estimated warranty liability - 12/31/2022 243,000
Estimated warranty liability per book 205,000
Decrease in warranty liability 38,000

Estimated warranty liability 38,000

Warranty expense 38,000