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PROBLEMS
19 Purchases 72,000
Accounts Payable – Celeron Corporation 72,000
19 Purchases 69,840
Accounts Payable – Celeron Corporation 69,840
(b)
Dec. 31 Purchase Discounts Lost 720
Accounts Payable – Celeron Corporation 720
No obligation is recognized for the suit filed in September 2007 nor for the suit filed
in October. However, disclosure is necessary in the notes to the financial statements
for the suit filed in October 2007 by Pasig City government since it is probable the
Pasig City government will not be successful.
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Chapter 1 – Current Liabilities, Provisions and Contingencies
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Chapter 1 – Current Liabilities, Provisions and Contingencies
Note: The gift certificates estimated to expire will be recognized as revenues at the
date of actual expiration.
1-12. (Robinson)
Cash 3,000,000
Unearned Revenue from Gift Certificates Outstanding 3,000,000
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Chapter 1 – Current Liabilities, Provisions and Contingencies
Unearned Service Contract Revenue at December 31, 2008 may also be computed as
follows:
720,000 x 65% 468,000
864,000 x 20% x ½ 86,400
864,000 x 80% 691,200
Total 1,245,600
(c) 2007 2008
Revenue from service contracts P72,000 P266,400
Cost of service contracts 25,000 100,000
Profit from service contracts P47,000 P166,400
(b) 2007
Cash 5,500,000
Unearned Subscription Revenue 5,500,000
(b) 2008
Cash 7,000,000
Unearned Subscription Revenue 7,000,000
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Chapter 1 – Current Liabilities, Provisions and Contingencies
b. B = 8% (8000,000 – B )
B = 640,000 - .08B
B = 640,000/1.08 = 592,593
c. B = .08 (8,000,000 – T )
T = .35 (8,000,000 – B )
B = .08 {8,000,000 - .35 (8,000,000 – B ) }
B = .08 {8,000,000 – 2,800,000 + .35B}
B = 416,000 + .028B
B = 416,000/0.972 = 427,984
d. B = .08 {8,000,000 – B – T }
T = .35 (8,000,000 – B)
B = .08{8,000,000 – B - .35 (8,000,000 – B)}
B = .08 {8,000,000 – B – 2,800,000 + .35B}
B = 416,000 - .052B
B = 416,000/1.052 = 395,437
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Chapter 1 – Current Liabilities, Provisions and Contingencies
Current Non-current
Case 3. Sylvester Corporation
Situation A -0- 6,000,000
Situation B 6,000,000 0
Situation C -0- 6,000,000
Situation D -0- 6,000,000
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Chapter 1 – Current Liabilities, Provisions and Contingencies