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    Assignment#1

    Uploaded by

    Kristine Esplana Toralde
    The document contains 6 cases that calculate accounting liabilities in different scenarios. It also contains examples calculating bonuses and taxes. Key details include: - Case 2 recognizes a $800,000 liability as the best estimate of an obligation. - Case 3 calculates a $400,000 liability by averaging two amounts that bracket the best estimate. - Bonus calculations show how bonuses are affected by taxes and whether bonuses are considered before or after taxes in both single employee and multiple employee scenarios. - Warranty expense and liability accounts are journalized over 3 years with increasing sales but decreasing unused warranty balances each year.

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    © All Rights Reserved
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    Assignment#1

    Uploaded by

    Kristine Esplana Toralde
    39 views4 pages
    The document contains 6 cases that calculate accounting liabilities in different scenarios. It also contains examples calculating bonuses and taxes. Key details include: - Case 2 recognizes a $800,000 liability as the best estimate of an obligation. - Case 3 calculates a $400,000 liability by averaging two amounts that bracket the best estimate. - Bonus calculations show how bonuses are affected by taxes and whether bonuses are considered before or after taxes in both single employee and multiple employee scenarios. - Warranty expense and liability accounts are journalized over 3 years with increasing sales but decreasing unused warranty balances each year.

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    © © All Rights Reserved

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    The document contains 6 cases that calculate accounting liabilities in different scenarios. It also contains examples calculating bonuses and taxes. Key details include: - Case 2 recognizes a $800,000 liability as the best estimate of an obligation. - Case 3 calculates a $400,000 liability by averaging two amounts that bracket the best estimate. - Bonus calculations show how bonuses are affected by taxes and whether bonuses are considered before or after taxes in both single employee and multiple employee scenarios. - Warranty expense and liability accounts are journalized over 3 years with increasing sales but decreasing unused warranty balances each year.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    39 views4 pages

    Assignment#1

    Uploaded by

    Kristine Esplana Toralde
    The document contains 6 cases that calculate accounting liabilities in different scenarios. It also contains examples calculating bonuses and taxes. Key details include: - Case 2 recognizes a $800,000 liability as the best estimate of an obligation. - Case 3 calculates a $400,000 liability by averaging two amounts that bracket the best estimate. - Bonus calculations show how bonuses are affected by taxes and whether bonuses are considered before or after taxes in both single employee and multiple employee scenarios. - Warranty expense and liability accounts are journalized over 3 years with increasing sales but decreasing unused warranty balances each year.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 4

    TORALDE, MA.KRISTINE E.

    CBET-01-501E

    1-2.
    Case 1:
    The amount that will be recognized as a liability is P 0. It is mentioned that the
    provision is not likely to happen so ignore.

    Case 2:
    The amount that will be recognized as a liability is P 800,000, because it is considered
    the best estimate.

    Case 3:
    The amount that will be recognized as a liability is P 400,000.

    P 300,000
    500,000
    P 800,000/
    2
    Amount of Provision P 400,000

    Case 4:
    The amount that will be recognized as a liability is P 350,000. It is the amount offered
    by Dallas Company that is accepted by Kansas Corporation.

    Case 5:
    The amount that will be recognized as a liability is P 100,000.

    Major Defects (1,000,000 x 10%) = P 100,000


    Minor Defects (200,000 x 30%) = 60,000 P 160,000
    Less incurred warranty cost 60,000
    Amount of provision P 100,000

    Case 6:
    The amount that will be recognized as a liability is P 0. It only needs to be disclosed,
    because it is less than probable but more than remote means the provision is only
    possible to happen.
    1-3.

    a.) Bonus before bonus and income tax


    B = 8,000,000 x 8% = P 640,000

    b.) Bonus after bonus but before income tax


    B = .08 (8,000,000 – B)
    B = 640,000 – .08B
    B = 640,000/1.08 = P592,593

    c.) Bonus before bonus but after income tax


    B = .08 (8,000,000 – T)
    T = .30 (8,000,000 – B)

    B = .08 (8,000,000 - .30 (8,000,000 – B)


    B = .08 (8,000,000 – 2,400,000 + .30B)
    B = .08 (5,600,000 + .30B)
    B = 448,000 + .024B
    B = 448,000/.976 = P459,016

    d.) Bonus after bonus and income tax


    B = .08 (8,000,000 – B – T)
    T = .30 (8,000,000 –B)

    B = .08 (8,000,000 – B - .30 (8,000,000 – B)


    B = .08 (5,600,000 - .70B)
    B = 448,000 – 0.056B
    B = 448,000/1.056 = P 424,242

    1-4.

    a.) Bonus to Sales Manager = 3,000,000 x .08 = P 240,000


    Bonus to Sales Agent (each) = 3,000,000 x .06 = P 180,000

    b.) Total Bonus = 12% x 3 = 36%


    B = .36 (3,000,000 – B – T)
    T = .30 (3,000,000 – B)

    B = .36 (3,000,000 – B -.30(3,000,000 – B)


    B = .36 (3,000,000 – B – 900,000 - .30B)
    B = .36 (2,100,000 - .70B)
    B = 756,000 - .252B
    B = 756,000/1.252 = P 603,834
    Bonus for Sales Manager and Sales Agents (each) = (603,834/3) = P 201,278

    c.) Total Bonus = 12 + (10 x 2) = 32%


    B = .32 (3,000,000 – B)
    B = 960,000 - .32B
    B = 960,000/1.32 = P 727,273
    Bonus to Sales Manager = 727,273 x 12/32 = P 272,727
    Bonus to Sales Agent(each) = 727,273 x 10/32 = P 227,273

    1-5.

    B = .06 (9,000,000 – B – T)
    T = .30 (9,000,000 – B)

    B = .06 (9,000,000 – B - .30 (9,000,000 – B)


    B = .06 (9,000,000 – B – 2,700,000 - .30B)
    B = .06 (6,300,000 - .70B)
    B = 378,000 - .042B
    B = 378,000/1.042
    B = P 362,764

    T = .30 (9,000,000 – 362,764)


    T = .30 (8,637,236)
    Corporate income tax liability = P 2,591,171

    1-6.

    2019 Cash P1,000,000


    Sales P1,000,000

    Warranty Expense 60,000


    Warranty Liability 60,000

    Warranty Liability 8,000


    Cash 8,000

    2020 Cash 2,500,000


    Sales 2,500,000

    Warranty Expense 150,000


    Warranty Liability 150,000
    Warranty Liability 38,000
    Cash 38,000

    2021 Cash 3,500,000


    Sales 3,500,000

    Warranty Expense 210,000


    Warranty Liability 210,000

    Warranty Liability 112,500


    Cash 112,500

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