Problem 2-27 (IFRS) During the current year, Isabel Company sold gift certificates to customers worth P6,000,000. The gift certificates are nonrefundable and it is reliably determined that the breakage estimate is P600,000. Before the end of the year, the entity redeemed gift certificates worth P3,600,000. 1. What amount should be reported as breakage revenue for the current year? 400,000 b. 600,000 500,000 a. с. d. What amount should be reported as deferred revenue from gift certificates at year-end? 2,400,000 b. 2,000,000 6,000,000 с. d. a.

Problem 2-27 (IFRS) During the current year, Isabel Company sold gift certificates to customers worth P6,000,000. The gift certificates are nonrefundable and it is reliably determined that the breakage estimate is P600,000. Before the end of the year, the entity redeemed gift certificates worth P3,600,000. 1. What amount should be reported as breakage revenue for the current year? 400,000 b. 600,000 500,000 a. с. d. What amount should be reported as deferred revenue from gift certificates at year-end? 2,400,000 b. 2,000,000 6,000,000 с. d. a.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 1PB: Consider the following situations and determine (1) which type of liability should be recognized...

See similar textbooks

Similar questions

Reversing Entries Thomas Company entered into two transactions involving promissory notes and properly recorded each transaction. 1. On November 1, it purchased land at a cost of 8,000. It made a 2,000 down payment and signed a note payable agreeing to pay the 6,000 balance in 6 months plus interest at an annual rate of 10%. 2. On December 1, it accepted a 4,200, 3-month, 12% (annual interest rate) note receivable from a customer for the sale of merchandise. On December 31, Thomas made the following related adjustments: Required: 1. Assuming that Thomas uses reversing entries, prepare journal entries to record: a. the January 1, reversing entries b. the March 1, 4,326 collection of the note receivable c. the May 1, 6,300 payment of the note payable 2. Assuming instead that Thomas does not use reversing entries, prepare journal entries to record the collection of the note receivable and the payment of the note payable.
Capstone Consulting Services acquired land 5 years ago for $200,000. Capstone recently signed an agreement to sell the land for $375,000. In accordance with the sales agreenwnt, the buyer transferred $375,000 to Capstone’s bank account on February 20. How would elements of the accounting equation be affected by the sale?
Reporting Liabilities Morton Electronics had the following obligations: a. A legally enforceable claim against the business to be paid in 3 months. b. A guarantee given by a seller to a purchaser to repair or replace defective goods during the first 6 months following a sale. c. An amount payable to Bank One in 10 years. d. An amount to be paid next year to Citibank on a long-term note payable. Required: CONCEPTIJAL CONNECTION Describe how each of these items should be reported in the balance sheet.
Consider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year). A. A business depreciates a building with a book value of $12,000, using straight-line depreciation, no salvage value, and a remaining useful life of six years. B. An organization has a line of credit with a supplier. The company purchases $35,500 worth of inventory on credit. Terms of purchase are 3/20, n/60. C. An employee earns $1,000 in pay and the employer withholds $46 for federal income tax. D. A customer pays $4,000 in advance for legal services. The lawyer has previously recognized 30% of the services as revenue. The remainder is outstanding.
PLEASE SHOW SOLUTIONS IN GOOD ACCOUNTING FORM. 6. On January 01, 2020 Kit Company, Inc. establishes a branch in Bauang. During the year, Kit Inc. transfers cash and merchandise to the branch worth P15,000 and P45,000 respectively. Freight was paid by the home office worth P1,500 included in the cost of merchandise. The home office also incurred P5,700 expenses of which 30 percent was allocated to the branch. On December 31, 2020, the branch incurred a loss of P4,000. What is the balance of the branch account as per home office books?
Show the solution in good accounting form On January 01, 2020 Kit Company, Inc. establishes a branch in Bauang. During the year, Kit Inc. transfers cash and merchandise to the branch worth P15,000 and P45,000 respectively. Freight was paid by the home office worth P1,500 included in the cost of merchandise. The home office also incurred P5,700 expenses of which 30 percent was allocated to the branch. On December 31, 2020, the branch incurred a loss of P4,000. What is the balance of the branch account as per home office books?
8. Crispin Santos started a retail merchandise business on January 1, 2021. During the year ended December 31, 2021, the entity paid trade creditors P2,000,000 and suffered a net loss of P350,000. The ledger account preclosing balances on December 31, 2021 included the following:· Accounts receivable- P600,000· Accounts payable- P750,000· Capital (total investment in cash)- P2,000,000· Expenses (paid in cash)- P100,000· Merchandise (unadjusted debit balance)- P700,000There were no withdrawals. All sales and purchases were on credit. The merchandise account is debited for purchases and credited for sales. What is the amount of purchases for the year? a. P2,800,000 b. P1,950,000 c. P2,750,000 d. P2,000,000
6. On January 01, 2020 Kit Company, Inc. establishes a branch in Bauang. During the year, Kit Inc. transfers cash and merchandise to the branch worth P15,000 and P45,000 respectively. Freight was paid by the home office worth P1,500 included in the cost of merchandise. The home office also incurred P5,700 expenses of which 30 percent was allocated to the branch. On December 31, 2020, the branch incurred a loss of P4,000. What is the balance of the branch account as per home office books
On January 1, 2021 Asset of Matalino Company was P2,500,000 and its liabilities was P800,000. By December 31, 2021 Asset of Matalino Company was P4,700,000 and its liabilities was P1,200,000. During the year the owner withdrew merchandise costing P100,000 with a sales value of P150,000. The owner also paid a P1,000,000 notes payable of the business with interest of 12% for nine months with a check drawn on a personal checking account. How much is the net income (loss) for Matalino Company as of December 31, 2021? Present solutions in good accounting form. No parenthetical solutions. Thanks and God bless!
8.The Carly Company uses cash-basis accounting for their records. During the year, Carly collected P500,000 from its customers, made payments of P200,000 to its suppliers for inventory, and paid P140,000 for operating costs. Carly wants to prepare accrual-basis statements. In gathering information for the accrual-basis financial statements, Carly discovered the following: Customers owed Carly P50,000 at the beginning and P35,000 at the end of the year. Carly owed suppliers P20,000 at the beginning and P27,000 at the end of the year. Carly's beginning inventory was P42,000, and its ending inventory was P44,000. Carly had prepaid expenses of P5,000 at the beginning and P7,400 at the end of the year. Carly had accrued expenses of P12,000 at the beginning and P19,000 at the end of the year. Depreciation for the year was P51,000. Determine the accrual basis net income of Carly Company for the current year. Group of answer choices P91,400 P98,400 P79,600 P84,400
3. During the fiscal year ended December 31, Duckworth Corporation engaged in the following transactions involving notes payable:Sept. 16. Purchased office equipment from Earthtime Equipment. The invoice amount was $24,000, and Earthtime agreed to accept, as full payment, on 12%, three-month note for the invoice amount.Nov. 1. Borrowed $100,000 from Sandra Duckworth, a major corporate stockholder. The corporation issued Duckworth a $100,000, 15%, 120-day note payable.Dec. 1. Purchased merchandise inventory in the amount of $5,000 from Teller Corporation. Teller accepted a 90-day, 14% note as a full settlement of the purchase. Duckworth Corporation uses a perpetual inventory system.Dec. 16. The $24,000 note payable to Earthtime Equipment matured today. Duckworth paid the accrued interest on this note and issued a new 30-day, 16% note payable in the amount of $24,000 to replace the note that matured.Instructions:a. Prepare journal entries (in general journal form) to record the above…