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    Module 8 - Liabilities

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    michaelconcepcion101

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    Module 8 - Liabilities

    Uploaded by

    michaelconcepcion101
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    1 views12 pages

    Module 8 - Liabilities

    Uploaded by

    michaelconcepcion101

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 12

    CHAPTER 8 - LIABILITIES

    Submitted by: Raymond Michael L. Concepcion (K32)


    Submitted to: Francisco Villamin Jr.
    LITIES
    cion (K32)
    Exercise 8-1
    1 Liability
    2 Operating Cycle
    3 Note Payable
    4 Discount on Notes Payable
    5 Noncurrent Liabilities
    6 Premiums and Coupons
    7 Provisions
    8 Interest and Present Value
    9 Term Bond
    10 Premium, Discount
    Exercise 8-2
    1 TRUE
    2 TRUE
    3 TRUE
    4 TRUE
    5 TRUE
    6 FALSE
    7 TRUE
    8 TRUE
    9 TRUE
    10 TRUE
    Exercise 8-3
    1 CL
    2 CL
    3 NCL
    4 CL
    5 CL
    6 CL
    7 CL
    8 NCL
    9 CL
    10 CL
    Exercise 8-4
    1A
    2A
    3D
    4D
    5A
    6D
    7D
    8C
    9C
    10 C
    Exercise 8-5
    Prince Company
    Current Liabilities
    As of December 31, 2020
    1 Accounts Payable 480,000
    Notes Payable 858,000
    Share Dividend Distributable 75,000
    Bonds Payable 20,000
    Accrued Interest on Bond Payable 40,000
    Accrued Salaries Expense 18,000
    TOTAL CURRENT LIABILITIES 1,491,000

    2 King Co.
    Account Payable
    As of December 31, 2020
    Accounts Payable 1,400,000
    Invoice Cost 50,000
    TOTAL ACCOUNTS PAYABLE 1,450,000

    3 Star Pro Magazine


    Unearned Income
    As of December 31, 2020
    Sold Annual subscriptions, Aug 1 20 10,000.00
    Price of each annual sub 200
    Total unearned revenue, aug 1 2020 2,000,000.00
    multiply by: 5/12 0.42
    Earned Portion, dec 31 2020 833,333.33
    Unearned revenue, dec 31 2020 1,166,666.67

    4 Regal Studios
    Premiums
    As of December 31, 2020
    Neede # of coupons for a ticket 2
    Ticket cost 15
    est. % of coupons redeemed 0.4

    Coupons redeemed 250,000.00


    # of coupons needed for a ticket 2
    Tickets validated by coupon 125,000.00
    cost of a ticket 15
    Estimated liability for premium clai 1,875,000.00
    5 Golden Enterprises
    Warranties
    As of December 31, 2020
    units sold 4,000.00
    price of each unit 10,000.00
    est. % of defective units 0.03
    repair cost per unit 1,500.00

    units sold 4,000.00


    repair cost per unit 1,500.00
    Total Warranty Costs 6,000,000.00
    est. % of defective units 0.03
    Estimated warranty costs 180,000.00

    6 Barney Corporation
    Warranties
    As of December 31, 2020
    NOTES PAYABLE
    10,000,000-1,000,000 9,000,000.00
    10% compounded annually x 10%
    900,000.00
    900,000*3 years 2,700,000.00
    MATURITY VALUE 11,700,000.00

    7 JFK Inc.
    Notes Payable
    As of January 1, 2020
    Face value (12000000-2000000) 10,000,000.00
    PRESENT VALUE OF THE NOTE 7,593,375.00
    DISCOUNT ON NOTES PAYABALE 2,406,625.00

    8 The counsel believes that it is possible that the outcome of the lawsuit will be unfavorab

    9 A. Issue Price
    Amortization Schedule
    Date
    Jan-01
    Dec-31

    B. Carrying Value

    10 5,000,000-4,695,000 = 305,000 discount recorded at issuance


    Amortization Schedule
    Date Stated Interest
    Jan-01
    Dec-31 450,000

    Interest Expense 500,000.00


    Amount Reported as Bond Payable 4,745,000.00

    11 Accounts Payable 115,000.00


    Cash Dividend Payable 30,000.00
    Income Tax Payable 18,000.00
    Accrued Salaries Payable 20,000.00
    Customer's Deposited 9,900.00
    Mortgage Payable 2,000,000.00
    TOTAL LIABILITIES 2,192,900.00

    12 A Working Capital
    B Current Ratio
    C Liquidity
    D Debt to Total Asset Ratio
    E Times Interest Earned Ratio
    F Solvency
    cereal sold 640000
    tix purchased by Regal 140000
    Coupons Redeemed 250000
    # of warranty contracts h 80
    total cost 120000
    provision for warranty ac 120000

    2,500,000 annual installments for 4 years


    (2500000*3.03735)

    e of the lawsuit will be unfavorable. They should only disclose and note this. No entries are needed.

    3,405,000.00

    Stated Interest Market Interest Premium Amortization Bond Amortized Cost


    405,000
    300,000 240,000 60,000 345,000

    3,345,000
    Market Interest Premium Amortization Bond Amortized Cost
    305,000
    500,000 -50,000 255,000

    1600000
    2.33 Average is 1.5
    Yes, company is liquid in relation to its current obligations
    35.29% Average is less than 40%
    4.6 Average is 4.60
    Yes, the company is solvent and ready to pay all debts

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