NAME: LAGRIMAS, SARAH NICOLE S.

PROVISIONS, CONTINGENCIES AND OTHER LIABILITIES

PROBLEM 1-1
a, c, e, g, h, i, m, n, o, p
PROBLEM 1-2
Case 1- None
Case 2 - P800,000
Case 3 - P400,000
Case 4 - P350,000
Case 5 - P100,000 = (1M × 10%) + (200,000 × 30%) - 60,000
Case 6 -None
PROBLEM 1-3
a.) B= 8.000.000 × 8%= ₱640,000 d.) B= .08 /8.000.000- B- T \
b.) B= 8% (8000,000 - B ) T - .30 (8,000,000 - B)
B= 640.000 - 08B B = .08{8,000,000 - B- .30 (8,000,000 - B)}
B = 640,000/1.08 = ₱592,593 B = .08 {8,000,000 - B - 2,400,000 + 30B}
c.) B = .08 (8.000.000- T ) B = 448,000 - .056B
Т = .30 (8,000,000 - B) B= 448,000/1.056 = ₱424,242
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
PROBLEM 1-4
a.) Bonus to sales manager = .08 × 3,000,000 = B = ₱240,000
Bonus to each sales agent = .06 × 3,000,000 = B = ₱180,000
b.) Total Bonus = .36 {3,000,000 - B - T )
T = .30 {3,000,000 -B }
B= .363,000,000-B-.30(3,000,000-B)}
B = .36 {3,000,000 - B- 900,000 + .30B}
B = 756,000 - .252B
B= 756.000/1.252 = 603,834 (total)
B (Each): 603,834 / 3 B = ₱201,278
c.) B=.32{3,000,000-B}
B = 960,000 - .32B
B = 960,000/1.32 = 727,273 (total)
B (Sales Manager): 727,273 × 12/32 B = ₱272,727
B (Each Sales Agent): 727,273 × 10/32 B = ₱227,273
PROBLEM 1-5
B= .06{9,000,000-B-T}
Т = .30 (9,000,000 - B)
B = .06 (9,000,000- B- .30 (9,000,000 - B) }
B= .06 {9,000,000- B- 2,700,000 + .30B }
B = 378,000 - .042B
B = 378,000 / 1.042 = 362,764
T = .30 (9.000.000 - 362.764) T = ₱2,591,171
 PROBLEM 1-6
2019 2020 2021
Sale of Product 1,000,000 2,500,000 3,500,000
Cash/ Accounts Receivables 1,000,000 2,500,000 3,500,000
Sales

Accrual of Repairs
Warranty Expense 60,000 150,000 210,000
Warranty Liability 60,000 150,000 210,000

Actual Repairs
Warranty Liability 8,000 38,000 112,500
Cash/ Accounts Payable 8,000 38,000 112,500
PROBLEM 1-7
a.) 2019 2020
Warranty Liability, January 1 ₱0 ₱187,200
Warranty expense (8% × 4,200,000)/(8% × 6,960,000) 336,000 556,800
Actual repair costs incurred -148,800 -180,000
Warranty liability, December 31 ₱187,200 ₱564,000

b.)
On 2019 sales (4,200,000 × 5% × ⁄ )
On 2020 sales [(1/2 of 3%) + 5%] × 6,960,000 ₱105,000
Predicted warranty liability at December 31, 2020 452,400
₱557,400
PROBLEM 1-8
a.) 2019 2020
Cash 720,000 864,000
Unearned Revenue from Warranty Contracts 720,000 864,000

Cost of Warranty Contracts 25,000 100,000

Cash, Materials, etc. 25,000 100,000

Unearned Revenue from Warranty Contracts 72,000 266,400

Revenue from Warranty Contracts 72,000 266,400

b.)
From 2019 contracts 720,000 × 65% 468,000
From 2020 contracts 864,000 × 90% 777,600
Total ₱1,245,600

c.) 2019 2020

Revenue from warranty contracts 72,000 266,400
Cost of Warranty Contracts 25,000 100,000
Profit from warranty contracts ₱47,000 ₱166,400
 PROBLEM 1-9
a.)
Premium Inventory 25,000
Cash/Accounts Payable 25,000

b.)
Cash/ Accounts Receivable 15,000,000
Sales 14,062,500
Unearned Revenue for Premium Claims 937,500

c.)
Cash 50,000
Unearned Revenue for Premium Claims 234,375
Sales 284,375
PROBLEM 1-10
a.)
Basis of allocation of sales price of main product
Selling price of main product 300,000 × 30 9,000,000
Selling price of premium (300,000 × 30%)/20 = 4,500 x 40 180,000
₱9,180,000

Allocation of sales price

To main product 9,000,000 × (9M/9.180M 8,823,529
To premium 9,000,000 × (180,000/9,180,000) Total 176,471
Total ₱9,000,000

Unearned revenue for unredeemed coupons before redemption 176,471

Reduction resulting from redemption 176,471 × (4,000/4,500) 158,963
Unearned revenue for unredeemed coupons, December 31 ₱19,608

b.)
Additional Sales [176,471 × (4,000/4,500)] ₱158,963