Gar Company disclosed the following liability account balances on December 31, 2014:

Accounts payable 1,900,000

Bonds payable 3,400,000

Premium on bonds payable 200,000

Deferred tax liability 400,000

Dividends payable 500,000

Income tax payable 900,000

Note payable, due January 31, 2015 600,000

The deferred tax liability is based on temporary differences that will reverse in 2016. In
the December 31, 2014 statement of financial position, what total amount should be
reported as current liabilities? = 3,900,000

Sonia Company reported gross payroll of P600,000 for the month of January. The entity
paid the payroll net of the following deductions:

Income tax 70,000

SSS 10,000

Philhealth 5,000

Pagibig 7,000

In addition, the entity recognized its additional contributions for the following in relation
to January payroll:

SSS 15,000

Philhealth 6,000

Pagibig 8,000

What is the total payroll tax liability? = 121,000

Kemp Company must determine the December 31,2013 accruals for advertising and
rent expense. A P50,000 advertising bill was received January 7, 2014, comprising
costs of P35,000 for advertisements in December 2013 issues, and PI5,000 for
advertisements in January 2014 issues of the newspaper.

A store lease, effective December 16,2013, calls for fixed rent of P120,000 per month,
payable one month from the effective date and monthly thereafter. In addition, rent
equal to 5% of net sales over P6,000,000 per calendar year is payable on January 31 of
the following year. Net sales for 2013 totaled P9,000,000. On December 31,2013, what
amount should be reported as accrued liabilities? = 245,000

Hart Company sells subscriptions to a specialized directory that is published semi-

annually and shipped to subscribers on April 15 and October 15. Subscriptions received
after the March 31 and September 30 cut-off dates are held for the next publication.
Cash from subscribers is received evenly during the year and is credited to deferred
revenue from subscriptions. Data relating to 2014 are as follows:

Deferred revenue from subscriptions on January 1 1,500,000

Cash receipts from subscribers 7,200,000

What amount should be reported as deferred revenue from subscription on December

31, 2014? = 1,800,000

Jeane Company, a retailer of electrical goods, participates in a customer loyalty

program operated by an airline. The entity grants program members one air travel point
for every P1,000 spent on electrical goods. Program members can redeem the points
for travel with the airline subject to availability. The entity pays the airline P90 for each
point. During 2013, the entity sold electrical goods for consideration totaling P5,000,000
and granted 5,000 points. The fair value of a point is P100. If the entity has collected the
consideration allocated to the points on its own account, what is the revenue to be
recognized in 2013 in relation to the points? = 500,000

James Company operates a customer loyalty program. The entity grants program
members loyalty points when they spend a specified amount on purchases. Program
members can redeem the points for further purchases. The points have no expiry date.
During 2014, the entity granted 80,000 points. Management expects that 90% of these
points will be redeemed. The fair value of each loyalty point is estimated at P20. The
sales during 2014 amounted to P9,000,000 including the loyalty points. On December
31, 2014, 28,800 points have been redeemed in exchange for purchases. In 2015, the
management revised its expectations and now expects 85% of the points to be
redeemed altogether. During 2015, the entity redeemed 12,000 points. What is the
revenue earned from loyalty points for the year ended December 31, 2015? = 320,000