1.) XYZ Corp. launched a promotional campaign on Sept 1, 2019.

XYZ placed coupon redeemable

for a soup bowl in each package of Fresh milk sold at P200. Each soup bowl costs P100. A
soup bowl is offered to customers who send in 5 coupons and a remittance of P30. The handling
cost per premium is P20. XYZ estimated that only 60% of the coupons issued will be
redeemed. For the 6 months ended December 31, 2019, data is available:
Soup bowl purchased 10,000
Coupons redeemed 40,000
Packages of Freshmilk sold 100,000

What is the estimated liability for coupons on December 31, 2019?

Estimated to be redeemed (100,000 x 60%) 60,000

Less coupons redeemed 40,000
Coupons outstanding 20,000
Divide by exchange rate 5
Premiums to be issued 4,000
Multiply by net premium cost (₱IOO + P20 — P30) 90
Estimated liability for coupons, 12/31/10 360,000

2.) In 2018, LYON Corp, launched a new product which is customized refrigerator carrying a 2-year
warranty against defects. The estimated warranty costs related to peso sales
are five percent within twelve months following sale and ten percent in the second twelve
months following sale. Sales Revenue and actual warranty expenditures for the years ended
December 31, 2018 and 2019 are as follows:
Actual expenditures Sales____
2018 1,500,000 20,000,000
2019 3,000,000 25,000,000

At December 31, 2018, LYON would report estimated warranty liability of

(45,000,000 x 15%) – 4,500,000 = 2,250,000

3.) CEREEN Corp. is selling a gift certificates redeemable only when goods are acquired or
purchased. The gift certificates have an expiration date 2 years after issuance date. Upon
redemption and/or expiration, CEREEN recognizes the unearned revenue as realized. Data for
2018 are as follows:

Gift certificates redeemed during the year 4,000,000

Gift certificates sold during 2017 3,000,000
Gift certificates sold during the year 5,000,000
Gift certificates redeemed during the year 4,000,000
Expired gift certificates during the year 500,000
Cost of goods sold during 2018 60%
Unearned revenue, 1/1/2018 1,000,000

At December 31, 2018, CEREEN report unearned revenue of

Gift Certificates sold 5,000,000

Cost of goods sold during 2018 x 60%
3,000,000
Less: Unearned Revenue, Beg. (1,000,000)
Expired gift certificates ( 500,000)
Unearned Revenue 1,500,000

4.) TITA Corp., on September 1, 2017, issued a note payable to Banco De Oro Bank in the amount
of P10,000,000, bearing interest at fifteen percent, and payable in 5 equal annual principal
payments of P2,000,000. During this date, the BDO’s prime rate was twelve percent. The 1st
payment for interest and principal was made on September 1, 2018.

At December 31, 2018, TITA should record accrued interest payable of

4
[(10,000,000 – 2,000,000) x 15%] x 12 = 400,000
5.) On December 31, 2015, the bookkeeper of Ed Company provided the following infromation:

Serial bonds, payable in semiannual installments

of P1,000,000 10,000,000

Accrued interest on bonds payable 300,000

Credit balance in customers' accounts 400,000

Trade payable, including deposits and advances

from customers of P500,000 2,500,000

Note payable, including note payable to bank due on

December 31, 2017 for P1,000,000 3,000,000

Stock dividends payable 800,000

Contested BIR tax assessment 600,000

Unearned Service income 100,000

In the December 31, 2015 balance sheet, how much current liabilities should be reported?

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