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Financial and Non Financial Liabilities

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187 views2 pages

Financial and Non Financial Liabilities

.

Uploaded by

evalequeen23
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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A.

Financial and Non-Financial Liabilities


Mid-Earth Co.’s liabilities as of December 31, 2021, include the following

Accounts Payable 15,000


Preference shares issued with mandatory redemption 100,000
Unearned Income 7,000
Utilities Payable 16,000
Warranty Obligation 7,000
Deferred Tax Liability 2,000
PhilHealth Contribution Payable 5,000
Obligation to deliver a fixed number of own shares worth a fixed amount of
cash 12,000
Share dividends payable 3,000
Rent Payable 9,000

Requirement. Compute for the total financial liabilities to be disclosed in Mid-Earth Co.’s
2021 notes to financial statement.

B. Current and Noncurrent liabilities


Patience Co.’s liabilities as of December 31, 2021, include the following:

Accounts Payable 500,000


Held for trading financial liabilities 1,000,000
Note Payable (P1M due in 2023) 2,800,000
Unearned Revenue 300,000
Dividends Payable 800,000
Deferred Tax Liability 200,000

Requirement. Compute for the total current liabilities

C. Refinancing agreement & Liabilities Payable on Demand


Turmeric Co.’s liabilities as of December 31, 2021 (current year-end) include the following:

 P10,000,000, 8-year loan maturing on December 31, 2022. Turmeric Co. intends to
refinance this liability on a long-term basis on February 2, 2022. Turmeric’s 2021
financial statements were authorized for issue on March 31, 2022.
 P6,000,000 loan that is payable on demand. There is no indication as of December
31, 2021, that the creditor will demand repayment within the next 12 months.
 P14,000,000 loan due on December 31, 2029. Turmeric breached a loan provision
accelerating the repayment of this loan within the next 12 months. However, on
January 12, 2022, the creditor granted Turmeric Co. a 12-month grace period to
rectify the breach, within which the creditor will not demand immediate repayment.

Requirement. Compute for the total current liabilities as of December 31, 2021.

D. Accounts Payable

Kind Co.’s accounts payable on December 31, 2021, had a balance of P1,200,00 before
possible adjustments for the following:
 Goods shipped to Kind under FOB destination on December 27, 2021 were lost in
transit. Kind did not record the invoice cost of P60,000.
 Goods shipped to Kind under FOB shipping point of December 28, 2021 were
received and recorded at the invoice cost of P70,000 on January 2, 2022.
 Kind received notice of shipment of goods from a vendor on December 30, 2021 and
recorded the invoice cos of P80,000 on that date. It was later found out on January 6,
2022, when the goods were received, that the shipment was made on an FOB
destination term.

Requirement. Compute for the correct balance of accounts payable on December 31, 2021.

E. Unearned Income
KenPangs Co. Sells one-year subscriptions for access to an online streaming of movies and
TV programs. Information on subscriptions is as follows:
2021 2022
Subscriptions 900,000 2,800,000

Subscriptions expirations:
2021 740,000
2022 160,000 2,690,000
2023 110,000
Requirement. Compute for the amounts of subscriptions revenue and unearned
subscriptions to be reported in KenPangs Co.’s 2022 Financial Statements.

F. Gift Certificates
During the year, KitDxm Co. sold gift certificates worth P400,000, of which P216,000 were
redeemed. KitDxm Co. has sold gift cards for many years and, based on its historical data,
10% of the gift cards sold are never redeemed.

Requirement. Provide the journal entries using PFRS 15.

G. Accrued Liabilities
JKP Co. has total current liabilities of P5,480,000 as of December 31, 2021 before
considering the following:
 December 2021 utilities of P50,000 were paid on January 7, 2022.
 Cash dividends of P290,000 were declared and paid in January 2022. JKP Co.s
2021 financial statements were authorized for issue on February 14, 2022.
 Employee withholding taxes in 2021 were understated by P20,000.

Requirement. Compute for the correct balance of current liabilities.

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