a * : CPA REVIEW SCHOCL OF THE PHILIPPINES oF, Manila ee ACCOUNTING I- 2REWEEKLECYURE VALIX SIY VALIX FERRER © C & danelie| Video selts one afd two-year mail order subscriptions for’ vided of: the month busineds, Subscriptions ae collected in advance and credited to sales. An'analysis of the recorddd sales activity revealed the following: ' . 2013 2014 Sales 7 7 420,000 500,000 Cancglations : 20,000 30,000 Subscriptions expiration: 2013 120,000 2014 | ; 1 135,000, 130,000 2015 ; ! 125,000 7" 200,000." 2016 ry 4 140,000 ~~ On Detember 31, 2014, what is the uncamed subscription revenue? “a. 495,000 i af 470,000 ® ce 465,000 74 Fs ade d. 340,060 C2 Janine|Company cells products in reusable containers. The customer is charged a deposit for each container delivered and receives # refund for each container retumed within two years> after the year of delivery. The entity accounts for the containers not retumed within the time limit as being retired by sale at the depesit amount. Information for 2014 is as follows: oh December 31, 2013 frem deliveries in: 150,000 430,000 + ~ 580,900 Deposits for containers delivered in 2014 780,000 » Deposi:s for coatainers returned in 2014 from deliveries in: ia . . 90,000 2013 250,000 2 014 : 286,000 2 626,000 cember 31, 2014, what amount should be reported as~ liability for deposits on 000 - + 8 see : «c.) 644,000 i 734,000 ; a Company sells appliunce service contracts agreeing to repair appliances for a tw year period. The past experience is thst, of the total amount spent for rspairs.on service ‘contudcts, 40% is incurred evenly YWucing the first contract year and 60% évenly "during the seconil contract year. Recetpts frm service contact sales for 2014 and 2015 are P500,000 and P600,000 respectively. Receipts froin contracts ard crediied to uneamied service contract revenhe. Al} sales are made evenly during the year. What amount should be reported as unearned service coutract revenue on Dteember 31, 2015? a. 340,000 ts wens 20 b. apo.o00 ont c._ 449,000 abe @ ae eee© Ei Page 2 4. Kristih Company recosds stamp service revenue and provides for the cost of redemptions in the yar stamps tre sold to lisersees. The past experience indicates that only (80% of the Stamps sold~to licensees will be redeemed. The liability for stamp redemptions was P6,00),000 on January I, 2014. Additional information during the year is as follows 4,000,000 X202> 2% Stamp service reverue from stamps sold to licensees 2,750,000 Cost of redenptions for stamps sold prior to January 1, 2014 * If all khe stumps sold in 2014 were pezsented for redemption in 2015, the redemption cost would be P2,250,009. What is the estin.ated liability on December 31, 2014? a. 7,259,000 a Ptah ene 5,660,000 2 es (5,050,000 4. 3,P50,000 » ee ot Cow) : t C53. Merill|Company offers three payment plans on its twelve-month contracts. Information oa the ‘three plans and the number of children enrolled in each plan for the September 1, 2014 to Acagudt 31, 2015 contract year follows: . | - . Initial payment per child Monthly fee per child Number of children Plan A 50,000 . 74s Plan B 20,000 3,000 12 5,000 9 Plan = The extity received P990,000 of initial payments on September 1, 2014 and P324,000 of monthly fees during the period September 1, 2014 to December 31, 2014. On December 33 2014, what emount should be reported as deferred reveniie? “s shadows opm x p~ C b. 438,000 Yeo i j (ew) “ ©. ae a Bo. z 37. On January 1, 2014, Hook Company so!d equipment with a cerrying amount of P100,000, and a rfmaining useful fife of ten years for P150,000. The entity immedixtely leased the equipmbat back under a ten-year finance lease with a present value of P130,000 and will deprecidte the equipment using the straight-line method. The entity made the first annual “ lease payment of P24,412 in December 2014. On December 31, 2014, what amount should be repofied as unenenéd gain onequinmentsale? =", 10 a Aro) 2. 50,900 s ©) 45,4c0 ee fe. 25.498 cs) aye FIED ©” B 38.Christopner Company leased machine ou January 1,2014 wih the following information: » Annual rental payable at the beginning of each leuse year 400,000 10 years he I2years 14% jods at 14% 5.95af Poge 10 19,008,000 inceme before provision for Income tax. The following data art provided for the current year: a AL 39. Justin Gor:pony reported Rent geecived in advance 1,600,000 Income from. exempt municipal bonds 2,000,000 Depreciation deduction for income tax purposes in excess of depreciation ported for financial reporting purposes 1,000,000 Estimpied tax payment for current year 300,000 Enacted corporate income tax rate _--—~ 30% : What dmount ofeurrent inconis tax libllity should be reported st year-end, CH) 1,780,000 Btn # + Caaeiee) ‘8. 2,780,000 poled Juco,tco is “vs C1090, 600) & aan ano 2,980,000 nov" 4 [isis Gece) a x 5 B 0. Towed Company began operations on January |, 2014. For financial reporting, the entity Hoa esters ul szles under the accrual method. However, in ihe income toe fit on these installment recogth retum| the entity reported under the instal sales tinder each method was a follows: {Iment method, The gross prot Installment method, Yeni Accrual method , 2014) 1,690,000 600,000 { "1 2015) 2,600,000 : 1,800,000 7" ‘There are no other teinporazy OF The frcome tax arte is 30% for 2014 and future years. permhnent differences. On December 31, 2015, what amount fax lipbility? eo , a. 840,000 : Ts 4%. 660.000 : Tia c. 600,000 ae a3 * z + cam . fr 41. Grim Company reported pretax financial statement income of 290,000 and taxable income of $0,000, The difference is due tothe folowing: . Interest on municipal bonds 70,000 Premium expense on keyinan life insurance : (20,000) Total ‘50.000 The [income tax rate is 30%. Who income tax expense? Ca: 45,000 . ‘ ‘b. $1,000 ce. 60,000 d. 46,000 {should be reported as deferred 0 t amount should be reported as current provistoa for END 5860