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PROBLEM 1:
The following lead schedule of the Demi Corporation's current
lj abi'1 itie.s was made avaif able to you in line with your audit of
t-he company's financial- statements as of and for the period ended
December 31, 2A16:
Accounts payable P974,500
Warranties pavable 489,500
Premiums payable 53, 2oo
Income tax payable 581,269
10% Notes payable, bank 500,000
Inte.rest payable 4 ,767
Audi.,* notes:
a. The acccunts oa1'ab1e balance is net of P56, 800 supplier
accounts debi'- balances due to gdv_4nc-e-- _p.alEte:1-ts fcr
ciei-veri-es to be accepteci the f of lowing year.
The balance of the warranties payable account r^/as the
1 i ,.- :...'-:' , -l : l.'... ':-r a:-a.:' ','eal: iCf
-:-
ja::1:---- es 3:- saie< Iriace !i 2a-a. l::iS iS ii ccn:eCtio::
;- --:. ::,e cne-!'ear 'rarrantv program adoc-ued by the conpany
..a:.-in9 2C15. flg company estimates, as per industry
e;.:per.t-ence that 60 z of the products sc-Ld wilt be returned
for _r__epAi€ anC that the eg+a_n-r-et-eg _ qS.L!.- to repair the
returned units shall be !1-80 in parts and labor. The
fol-lowing information were dbemed relevant:
20\5 2076
Sales (in number of units) 8, 510 9,680
Selling price.per unit P1, 250 P1 , 310
Actual repairs on units reLurned I p429,580 P987,"720
./{x.:'i'j
Actua.l- repairs cc,st incurred were apprcpriately charged to
the warranties expense. You further ascertained that from
.h: repairl cost paiO in 2ot6q I1]::-00j_, relaies ro rhe
units so.Ld iq
,,\
20111.