Solution manual financial accounting by valix ch1 4

FINANCIAL ACCOUNTINGVolume Two Valix and Peralta 2008 Edition SOLUTION MANUAL 1 CHAPTER 1 Problem 1-1 Problem 1-2 Problem 1-3 Problem 1-4... Nevertheless, the note payableshould continu

FINANCIAL ACCOUNTING

Volume Two Valix and Peralta

2008 Edition SOLUTION MANUAL

1 CHAPTER 1

Problem 1-1 Problem 1-2 Problem 1-3 Problem 1-4

assessment 300,000 Accrued liabilities

Note payable – shareholder 2,000,000

Less: Discount on note payable 113,000

Note payable – shareholder:

Amortization of discount from July 1 – December 31, 2008

113,000

Total interest expense

on April 1, 2009 in the amount of P3,000,000 Nevertheless, the note payableshould continue to be classified as current

Total accrued interest payable, December 31, 2008 232,000

If the interest is compounded annually, it means that the accrued interest for one year will also earn interest

Problem 1-15 Answer B

12% note payable – refinanced

5,000,000

4Problem 1-16 Answer A

PAS 1, paragraph 63, provides that an entity shall classify its financial liabilities

as current when they are due to be settled within twelve months after balance

sheet date even if an agreement to refinance or reschedule payment on a term basis is completed after balance sheet date and before the financial

long-statements are authorized for issue

Premiums – towels (1,000 x 100) 100,000

4 Premium expense (1,000 X 5) 5,000

Cash 5,000

Estimated premiums payable 51,000 68,000Selling expense:

Premium expense 136,000 170,000

Problem 1-21 Answer B Problem 1-22 Answer D

Coupons to be redeemed Premiums to be distributed

Number of premiums (56,000 / 5) 11,200 Premium liability (5,000 x 100)

500,000Amount of liability (11,200 x 20) 224,000

Problem 1-23 Answer B Problem 1-24 Answer B

Premiums distributed in 2009 5,500 Coupons to be redeemed

Estimated premiums in 2009 500 80% x 500,000) 400,000Total 6,000 Less: Coupons redeemed

1 Cash (300 x 15,000) 4,500,000

Sales

4,500,000

2 Warranty expense 144,000

Estimated warranty liability (60% x 300 = 180 x 800)

Accrual approach 2008

Problem 1-30 Answer C Problem 1-31 Answer A

Warranty expense (3,000 x 80) 240,000 Warranty expense

Less: Actual warranty cost 70,000 (5% x 5,000,000)

3 Gift certificates payable 40,000

Forfeited gift certificates (8% x 500,000)

40,000

Problem 1-36

3 Gift certificates payable 40,000

Forfeited gift certificates

Less: Gift certificates redeemed 780,000

Expired gift certificates 40,000

Less: Gift certificates redeemed 1,950,000

Expired gift certificates 100,000

Unearned revenue – December 31, 2008 500,000

Unredeemed – January 1, 2008

Unearned service contract revenue 860,000

Service contract revenue

The entire amount of P720,000 will be considered deferred revenue on

December 31, 2008 because the subscriptions start with the January 2009 issue

Liability for refundable deposit – January 1

Income before bonus and tax

Less: Containers returned in 2008 applicable to 2006 deliveries

Less: Containers returned in 2008 313,000

Containers not returned and expired 30,000 343,000 Containers’ deposit – December 31, 2008 337,000

the case is settled in March 2009 after the issuance of the 2008 financial

statements, the amount P1,500,000 should be disclosed However, if the case is

settled before the issuance of the statements, the actual award of P1,000,000

should be disclosed

Problem 1-56 Answer A

Haze can report a gain of P1,500,000 in its 2008 income statement because thisamount is already settled on December 31, 2008 However, the remainder ofP3,000,000 is only disclosed because the defendant has appealed the saidamount

1 7

Both are accrued as provision because the loss is probable and measurable.