IA2

QUIZ 1 CURRENT LIABILITIES

#1.) B

#2.) B

#3.) C

#4.) C

Trade Accounts Payable         600,000.00 

debit  balance - supplier account -        10,000.00 

Unreleased check             8,000.00 

Post dated check  

crebit  balance - supplier account             4,000.00 

Financial Liability designated  

FVPL

Bond Payable (10 years)         200,000.00 

Note payable - Oct 20x1           50,000.00 

Deferred Tax           10,000.00 

Unearned Rent             8,000.00 

Contingent Liability           20,000.00 

Reserve for contingencies           50,000.00 

 Total current liabilities         940,000.00 

#5.) B

#6.) C

As the company has not complied with loan agreement, the notes payable will render
payable on demand, which means the company has to pay the notes payable within one
year that is why it is considered as a current liability.
 
#7.) A

#8.) C

Step-by-Step explanation
The revenue is to be recorded only when earned under PFRS 15. It is earned when the
products were delivered or services were rendered or performed to the customers.
 
(1) In this problem, the earned revenue was the redeemed gift certificates with the amount
of P360,000 and the never redeemed of 50,000 (500,000 x 10%) that was good as earned
portion by the company. Total revenue is 410,000 (360,000 + 50,000).
 
(2) The liability portion is the unearned revenue, which is calculated as:
Unearned revenue (liability) = Unearned revenue at the beginning - (Amount never
redeemed + Redeemed)
Unearned revenue (liability) = 500,000 - [(500,000 x 10%) + 360,00]
Unearned revenue (liability) = 90,000 
 
#9.) C

unearned revenue, beg 2,000,000

advances received 20,000,000
Less:  
advances applied to orders 16,000,000
unearned revenue, end 6,000,000

#10.) A
Beginning balance 400.000
Payments received 3,000,000
Taxed paid (1,000,000)
Net interest (additional liability) (200,000 x 90%*)180,000
Ending balance P2,580,000