De La Salle Lipa 6.

In November and December 2021, Adventure Company received P792,000 for 1,000
College of Business, Economics, Accountancy and Management 3-year subscriptions at P264 per issue per year, starting with the January 2022 issue.
Accountancy and AIS Department Adventure elected to include the entire P792,000 in its 2021 income statement for tax
purposes. What amount should Adventure report in its 2021 statement of financial
Intermediate Accounting 2 (INTACC2A) position as unearned subscription revenue?
Assignment – Current Liabilities a. P 0 b. P 44,000 c. P 264,000 d. P 792,000

Choose the letter of the best answer. Show your solution in good form and double 7. Strand, Inc. Provides an incentive compensation plan under which its president
rule your final answer (2 points each). receives a bonus equal to 10% of the corporation’s income in excess of P600,000
before income tax but after deduction of the bonus. If income before income tax and
1. Mill Company sells washing machines that carry a 3-year warranty against bonus is P1,920,000 and the tax rate is 32%, the amount of the bonus would be:
manufacturer’s defects. Based on the entity’s experience, warranty costs are a. P 120,000 b. P 132,000 c. P 174,360 d. P 192,000
estimated at P300 per machine. During the current year, Mill Company sold 2,400
washing machines and paid warranty cost of P170,000. In its income statement for 8. Christine Company sells major household appliance service contracts for cash. The
the current year, Mill should report warranty expense of service contracts are for a one-year, two-year, or three-year period. Cash receipts
a. P170,000 b. P 240,000 c. P 550,000 d. P 720,000 from contracts are credited to unearned service contract revenue. This account had a
balance of P6,000,000 at December 31, 2019 before year-end adjustment. Service
2. Cely Company’s salaried employees are paid biweekly. Occasionally, advances made contract costs are charged as incurred to the service contract expense account, which
to employees are paid back by payroll deductions. Information relating to salaries for had a balance of P800,000 at December 31, 2019. Outstanding service contracts at
the calendar year 2022 is as follows: December 31, 2017 expire as follows:
12/31/21 12/31/22 2020 – P 1,250,000 2021 – P 2,000,000 2022 – P 900,000
Employee advances P 24,000 P 36,000
Accrued salaries payable 182,000 ? What amount should be reported as gross service contract revenue in Christine’s
Salaries expense during the year 1,820,000 2019 income statement?
Salaries paid during the year (gross) 1,750,000 a. P 800,000 b. P 1,050,000 c. P 1,850,000 d. P 4,150,000

At December 31, 2022, how much is the accrued salaries payable? 9. Eliot Corporation’s liabilities at December 31, 2021 were as follows:
a. P70,000 b. P252,000 c. P240,000 d. P216,000 Accounts payable and accrued interest P 2,000,000
5-year 10% Notes payable – due December 31, 2024 5,000,000
3. Keana Co. includes one coupon in each bag of dog food it sells. In return for eight
coupons, customers receive a leash. The leashes cost Keana P3.00 each. Keana Part of the loan agreement is for Eliot to appropriate a fixed amount out of its
estimates that 40% of the coupons will be redeemed. Data for 2021 and 2022 are as accumulated profits and losses annually until the amount of appropriation has
follows: equalled the face of the obligation. As of December 31, 2021, Eliot Corporation has
2021 2022 yet to comply with the loan agreement. In its December 31, 2021 statement of
Bags of dog food sold 500,000 600,000 financial position, Eliot should report current liabilities at
Leashes purchased 18,000 22,000 a. P 2,000,000 b. P 2,500,000 c. P 5,000,000 d. P 7,000,000
Coupons redeemed 120,000 150,000
10. Assuming the lender agreed on December 31, 2021 to provide a grace period of 12
The premium expense for 2021 is months for Eliot to rectify the breach and assured Eliot Corporation that no demand
a. P37,500 b. P45,000 c. P52,500 d. P75,000 of payment is to be made within the grace period, what amount of current liabilities
should Eliot Corporation report in its December 31, 2021 statement of financial
4. The estimated liability for premiums at December 31, 2011 is position?
a. P11,250 b. P15,000 c. P26,250 d. P30,000 a. P 2,000,000 b. P 2,500,000 c. P 5,000,000 d. P 7,000,000

5. The estimated liability for premiums at December 31, 2012 is

a. P16,875 b. P31,875 c. P33,750 d. P63,750