INSTRUCTIONS:

1. WRITE DOWN YOUR FINAL ANSWERS ON THE ANSWER SHEET PROVIDED. ANSWERS ON THE
QUESTIONNAIRE WILL NOT BE CONSIDERED. 2.
2. ROUND OFF ANSWERS TO THE NEAREST PESO.
3. DO NOT TALK WITH YOUR SEATMATES DURING THE QUIZ. QUESTIONS ABOUT THE QUIZ
SHOULD BE ADDRESSED DIRECTLY TO THE INSTRUCTOR.
4. DO NOT FORGET TO WRITE YOUR NAME ON THE ANSWER SHEET

Problem 1. ABC Company declared a bonus at yearend as an incentive for the outstanding performance
of its sales department. The bonus is computed at 12% of income after deduction for bonus and taxes.
Income after bonus but before taxes was P26,350,000 for the year. The company uses 30% tax rate.

1. How much was the bonus declared during the year?

2. How much was the deduction for taxes?

Problem 2. GT Company manufactures coffee products. During the year, GT offered to customers a
sales promotion giving away a limited-edition tumbler for 25 empty packages of coffee returned. Sales
and premium purchases were all made in cash.

Packages of coffee sold during the year 521,000

Selling price per pack 99.00
No. of tumblers bought 15,000 @P85each
Estimated number of tumblers to be redeemed 18,756
Actual number of coffee packages exchanged for tumblers 312,600

Required:

1. Prepare the journal entries for the year.

2. Compute the amount to be reported in the financial statements for the ff accounts:
2.1. Premiums—tumblers
2.2. Premium expense
2.3. Estimated premium liability

Problem 3. HK Co. began selling a new line of electronics that carry a 3-year warranty against defects.
Based upon past experience with similar products, the entity estimated warranty costs as a % of sales.
The estimated warranty costs related to peso sales are 2% for the 1st year, 4% for the 2nd year and 6% for
the 3rd year. Sales for 2022 and 2023 are 10M and 12M respectively. While actual warranty costs
amounted to P130,000 for 2022 and P560,000 for 2023.

1. What amount should be reported as warrant expense for 2022?

2. What amount should be reported as warrant expense for 2023?
3. What amount should be reported as estimated warrant liability for 2022?
4. What amount should be reported as estimated warranty liability for 2023?

Problem 4. ABC Co. has the following liabilities as of December 31,2021.

Accounts payable 250,000.00

Held for trading liabilities 400,000.00
Bank overdraft 3,000.00
Income tax payable 130,000.00
Share dividends payable 75,000.00
Accrued expenses 8,000.00
Loan due on April 8, 2022 200,000.00

Under an existing loan facility, ABC has the discretion to extend the due date of the loan in the amount
of P200,000 for another 12 months. How much should ABC Co. report as the total current liabilities?
NAME:
YR/BLK:

ANSWER SHEET

PROB 1. PROB. 3
1. 1.
2. 2.
3.
PROB 2. 4.
JOURNAL ENTRIES

PROB. 4.

2.1.
2.2.
2.3.