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er as
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o.
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o
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IFD0,00 (1600,000
PROBLEM 6 Manu Company requires advance payments with special order for machinery
constructed to customer specifications. These advances are nonrefundable. Information for the
current year is: Advances from customers - January 1
P1,100,000 Advances receive with orders
1,800,000 Advances applied to orders shipped
1,600,000 Advances applicable to orders cancelled
100,000 6. In Manu's December 31 balance sheet, what amount should be reported as current
liability for advances from customers? a. P1,400,000 b. P1,300,000 c. P1,200,000
d. Nil
C100,000
at the
m
er as
ge Depa intancy
co
100,000+,100,
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omers 200,00
o.
og City lcore: ate: rs e
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PROBLEM 7 Gamett Co. requires deposits from customers for the containers of goods
sold. The customers are refunded for the deposits received when the containers are
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returned within two years from the date of sale of the related goods. Deposits for
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containers not returned within the time limit are regarded as proceeds from retirement of
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the containers. Information for 2018 is as follows:
t they a ► you,
d give nd and
ed d
let me e able tak, o lent, I
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exam to ve my be
200,000
is
( 92,000)
Th
Container deposits at December 31, 2017, from deliveries in: 2016
P10,000 2017
90.000 P100,000 Deposits for containers delivered in 2018
sh
P100,000 Deposits for containers returned in 2018 from deliveries in: 2016
P10,000 2017
40,000 2018
42.000 P 92,000 7. How much is the liability for deposits on returnable
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containers on December 31, 2018? a. P118.,000 b. P115,000
c. P108,000
Jof, 900
choice ballpe
d. P100,000
nguish
PROBLEM 8 In September 2018. The lawyers of the current and former employees of
Fisher Inc. filed a P3,000,000 class action lawsuit, alleging that exposure to radiation
have caused significant medical problems. The lawyer of Fisher is uncertain as to the
outcome of the case. However, similar lawsuits against other firms in the same industry
have resulted in significant payments by the employer but there was no reliable estimate
as to the amount. 8. In Fisher's December 31, 2018 financial statements, which were
m
issued on April 30, 2019, how much should item be
er as
reported? a. An accrual of P3,000,000 b. No disclosure or accrual is necessary c. A disclosure
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indicating a possible loss of P3,000,000 d. If the payment can be estimate, a liability should be
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recognized, but if the amount of expected payment cannot be
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estimated, only a note disclosure would be required.
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Inguish
shment
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PROBLEM 9 In January 2018, Derick Co. gives a guarantee on a loan of Rose Corp. amounting
to P3,000,000. During the year, the financial condition of Rose deteriorates and at year-end,
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vi y re
Rose files a petition for bankruptcy. 9. In its year-end financial statements, Derick should a. Not
accrue and need not disclose the guarantee
c. Accrue a provision for liability of P3,000,000 b. Accrued and disclose the provision of
ed d
P3,000,000 d. Disclose the possible loss of P3,000,000
ar stu
aset.
gain
is
00
10,000.
Th
X
80% 2000
sh
P30,000
PROBLEM 10 To increase sales, Nowitzki Company inaugurated a promotional campaign
on June 30, 2018. Nowiztki placed a coupon redeemable for a premium in each box of
cake sold at P200. A coffee mug costing P30 is offered as premium to customers who
send in 5 coupon and a remittance of P10. The distribution cost per premium is P5.
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Nowitzki estimated that only 80% of the coupons issued will be redeemed. For the six
months ended December 31, 2018, the following is available: Boxes of cake sold
20,000 Premium purchased
3,000 Coupons redeemed D 10. What is the estimated liability for
coupons on December 31, 2018? a. P90,000 b. P80,000 c. P75,000
d. P30,000 (1000
1500 PROBLEM 11 Pacquiao Company includes one coupon in each
package of cereal it sells. A towel is offered as a premium to customers
who send in 10 coupons. Data for the premium offer are:
2017 2018 Packages of cereal sold
500,000 800,000 Number of towels purchased at P40 per towel
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30,000 60,000 Number of towels distributed as premium
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20,000 50,000 Number of towels to be distributed as premium next period
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5,000 3,000 11. In its 2018 Income statement, Pacquiao Company
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should be report premium expense at a. P2,400,000 b. P2,120,000 c.
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P2,000,000
d. P1,920,000
o
aC s
57,000 40 = 2000
vi y re
ed d
ar stu
is
Th
sh
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