Chapter 12

Liabilities

PROBLEM 12-1: TRUE OR FALSE

1. FALSE
2. TRUE
3. FALSE
4. FALSE - ₱11
5. FALSE
6. TRUE
7. TRUE
8. TRUE
9. FALSE
10. TRUE

PROBLEM 12-2: MULTIPLE CHOICE

1. C
2. D
3. C
4. C
5. C
6. B
7. A (see table below)
8. B (see table below)
 Date Payments Interest expense Amortization Present value
1/1/x1 2,640,656
12/31/x1 150,000 211,252 61,252 2,701,909
12/31/x2 150,000 216,153 66,153 2,768,061
12/31/x3 150,000 221,445 71,445 2,839,506
12/31/x4 150,000 227,160 77,160 2,916,667
12/31/x5 150,000 233,333 83,333 3,000,000

9. C (2,768,061 CA – 3M face amount) = 231,939

10. D

PROBLEM 12-3: FOR CLASSROOM DISCUSSION

1. C – choice (d) is recorded only in the Registries because the
purchased materials are not yet received.

2. D
3. B
4. D (see table below)
5. D (see table below)
6. A (see table below)

Date Payments Interest expense Amortization Present value

1/1/x1 1,840,292
12/31/x1 120,000 147,223 27,223 1,867,515
12/31/x2 120,000 149,401 29,401 1,896,916
12/31/x3 120,000 151,753 31,753 1,928,669
12/31/x4 120,000 154,294 34,294 1,962,963
12/31/x5 120,000 157,037 37,037 2,000,000

7. C
8. B
9. C
10. C