Quiz On Liabilities

FOR ITEM# 1
The following information about Malusog Company is available

at Dec. 31, 2021:
Employee income taxes withheld 900,000.00

Cash balance at First Bank 2,500,000.00
Cash overdraft at Second Bank 1,300,000.00
Accounts receivable with credit
balance 750,000.00
Estimated expenses of meeting
warranties on merchandise sold 500,000.00
Estimated damages as a result of
unsatisfactory performance on a
contract 1,500,000.00
Accounts payable 3,000,000.00
Deferred serial bonds, interest
bearing at 12%, payable in semi-
annual installments of Php500,000
due on April 1 and Oct 1 of each year
The last bond to be paid is on Oct 1,
2027. Interest is also paid semi-annually 5,000,000.00
Stock dividends payable 2,000,000.00
1. How much should be reported as current liabilities on Dec 31, 2021?
a. 8,100,000 c. 9,100,000
b. 7,950,000 d. 7,350,000
FOR ITEM# 2
An analysis of Bulma Company's liabilities disclosed the following:
Accounts payable, after deducting debit balances

in suppliers' accounts amounting to Php100,000 4,000,000.00
Accrued expenses 1,500,000.00
Credit balance of customers' accounts 500,000.00
Stock dividends payable 1,000,000.00
Claims for increase in wages covered in a pending
lawsuit 400,000.00
Estimated expenses in redeeming prize
coupons presented by customers 600,000.00
2. How much should be reported as current liabilities?

a. 6,700,000 c. 7,100,000
b. 6,600,000 d. 7,700,000
FOR ITEMS 3 AND 4

In an effor to increase sales, Mills Co. inaugurated a sales promotional
campaign on June 30, 2019. Mills placed a coupon redeemable for a
premium in each package of cereal sold. Each premium cost Mills Php20
and five coupons must be presented by a customer to received a
premium. Mills estimated that only 60% of the coupons issued will be
redeemed. For the six months ended Dec. 31, 2019, the following
information is available:
Packages of Premiums Coupons

cereal sold purchased redeemed
160,000.00 12,000.00 40,000.00
3. What is the estimated liability for premium claims outstanding

at December 31, 2019?
a. 160,000 c. 288,000
b. 224,000 d. 384,000
4. What is the amount of expense to be recorded for the year that is

related to the premium?
a. 160,000 c. 288,000
b. 224,000 d. 384,000
FOR ITEM# 5
Topsy Company started a new promotional program. For every 10

box tops returned to Topsy, customers receive a basketball. Topsy
estimates that only 60% of the box tops reaching the market will
be redeemed. Additional information is as follows:
Units Amount
Sales of product 100,000.00 30,000,000.00
Basketballs purchased 5,500.00 4,125,000.00
Basketballs distributed 4,000.00
5. What is the amount of year-end estimated liability associated

with this promotion?
a. 4,125,000 c. 3,000,000
b. 1,500,000 d. 4,500,000
FOR ITEM# 6 AND 7
On April 1, 2019, Mapalad Co. began offering a new product for

sale under a one-year warranty. Of the 50,000 units in inventory
at April 1, 2019, 30,000 had been sold by June 30,2019. Based on
its experience with similar products, Mapalad estimated that
the average warranty cost per unit sold would be Php80. Actual
warranty costs incurred from April 1 to June 30, 2019 amounted
to Php700,000.
6. At June 30, 2019, what is the amount of the estimated warranty

liability?
a. 900,000 c. 1,700,000
b. 1,600,000 d. 3,300,000
7. What is the amount of warranty expense to be recognized

as of June 30, 2019?
a. 700,000 c. 2,400,000
b. 1,600,000 d. 3,300,000
FOR ITEM# 8
Robby Dept. Store sells gift certificates redeemable only when

merchandise is purchased. Upon redemption, Robby recognizes
the unearned revenue as realized. Information for the current
year is as follows:
Unearned Revenue, Jan 1, 2019 650,000.00

Gift certificates sold 2,250,000.00
Gift certificates redeemed 1,950,000.00
Cost of Goods Sold 60%
8. On Dec 31, 2019, what amount should Robby report as unearned

revenue?
a. 510,000 c. 950,000
b. 570,000 d. 0.00
FOR ITEM# 9
Fell Company operates a retail grocery store that is required by

law to collect refundable deposits of Php5 on soda cans.
Information for the current year follows:
Liability for refundable deposit - Jan 1 150,000.00

Cans of soda sold 100,000.00
Soda cans returned 110,000.00
On Feb 1, Fell subleased space and received a Php25,000 deposit

to be applied against rent at the expiration of the lease in five
years.
9. At Dec 31, the amount of current liability for deposit amounts to:
a. 125,000 c. 100,000
b. 140,000 d. 165,000
FOR ITEM# 10
Malago Company must determine the Dec 31, 2019 accruals for
advertising and rent expense. A Php50,000 advertising bill was
received dated Jan. 7, 2020, comprising costs of Php35,000 for
advertisements in Dec. 2019 issues, and Php15,000 for adver-
tisements in Jan 2020 issues of the newspaper.
A store lease, effective Dec 16, 2018 calls for fixed rent of
Php120,000 per month, payable one month from the effective
date and monthly thereafter. In addition, rent equal to 5% of
net sales over Php6,000,000 per calendar year is payable on
Jan. 31, of the following year. Net Sales for 2019 totaled P9M.
10. In its Dec 31, 2019 Statement of Financial Position, Malago

should report accrued liabilities of:
a. 260,000 c. 210,000
b. 185,000 d. 245,000
2021
2027
900,000.00 1 2023
2024
1,300,000.00 2025
2026
750,000.00 2027
500,000.00
1,500,000.00
3,000,000.00
150,000.00

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FOR ITEM# 1

The following information about Malusog Company is available

Employee income taxes withheld 900,000.00

1. How much should be reported as current liabilities on Dec 31, 2021?

Accounts payable, after deducting debit balances

2. How much should be reported as current liabilities?

FOR ITEMS 3 AND 4

Packages of Premiums Coupons

160,000.00 12,000.00 40,000.00

3. What is the estimated liability for premium claims outstanding

4. What is the amount of expense to be recorded for the year that is

Topsy Company started a new promotional program. For every 10

5. What is the amount of year-end estimated liability associated

FOR ITEM# 6 AND 7

On April 1, 2019, Mapalad Co. began offering a new product for

6. At June 30, 2019, what is the amount of the estimated warranty

7. What is the amount of warranty expense to be recognized

Robby Dept. Store sells gift certificates redeemable only when

Unearned Revenue, Jan 1, 2019 650,000.00

8. On Dec 31, 2019, what amount should Robby report as unearned

Fell Company operates a retail grocery store that is required by

Liability for refundable deposit - Jan 1 150,000.00

On Feb 1, Fell subleased space and received a Php25,000 deposit

10. In its Dec 31, 2019 Statement of Financial Position, Malago

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