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10. Jim Company offers three payment plans on its 12-month contracts: Information on the three plans and the number of children enrolled in each plan for September 1, 2005 through August 31, 2006 contract year follows: Initial payment per Monthly fees per No. of children Plan child child #1 500 15 # 2 200 30 12 # 3 50 36 Jim received all the initial payments on September 1, 2005 and P3,240 of monthly fees during the period September 1 through December 31, 2005. In its December 31, 2005 balance sheet, what amount should Jim report as deferred revenue? а. 3,300 b. 4,380 с. 6,600 d. 9,900 (AICPA)

10. Jim Company offers three payment plans on its 12-month contracts: Information on the three plans and the number of children enrolled in each plan for September 1, 2005 through August 31, 2006 contract year follows: Initial payment per Monthly fees per No. of children Plan child child #1 500 15 # 2 200 30 12 # 3 50 36 Jim received all the initial payments on September 1, 2005 and P3,240 of monthly fees during the period September 1 through December 31, 2005. In its December 31, 2005 balance sheet, what amount should Jim report as deferred revenue? а. 3,300 b. 4,380 с. 6,600 d. 9,900 (AICPA)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Current Liabilities 47 10. Jim Company offers three payment plans on its 12-month contracts: Information on the three plans and the number of children enrolled in each plan for September 1, 2005 through August 31, 2006 contract year follows: Initial payment per Monthly fees per No. of Plan child child children #1 500 15 # 2 200 30 12 # 3 50 9. 36 Jim received all the initial payments on September 1, 2005 and P3,240 of monthly fees during the period September 1 through December 31, 2005. In its December 31, 2005 balance sheet, what amount should Jim report as deferred revenue? а. 3,300 b. 4,380 c. 6,600 d. 9,900 (AICPA) 11. Motor Co. sells service contracts that cover a 2-year period. The sale price of each contract is P2,000. Motor Co. sold 1,000 contracts evenly throughout 20x1. Based on Motor Co.'s past experience, 40% of contracts sold are earned in the first year of the contract and 60% in the second year. Approximately, how much are the current and noncurrent portions of the deferred revenue on December 31, 20x1? a. 1,366,667; 550,000 b. 1,250,000; 630,000 c. 1,000,000; 600,000 d. 870,000; 430,000 12. Cow Co, sells gift certificates that expire within a year. During 20x1, Cow Co. sold gift certificates worth P200,000, of which P108,000 were redeemed. Cow Co. expects that 10% of the gift certificates sold will not be redeemed. Under PFRS 15, what amounts of (1) total revenue and (2) liability should be reported in Cow Co.'s 20x1 financial statements? a. 108,000; 72,000 b. 128,000; 72,000 c. 120,000; 72,000 d. 120,000; 80,000
Transcribed Image Text:Current Liabilities 47 10. Jim Company offers three payment plans on its 12-month contracts: Information on the three plans and the number of children enrolled in each plan for September 1, 2005 through August 31, 2006 contract year follows: Initial payment per Monthly fees per No. of Plan child child children #1 500 15 # 2 200 30 12 # 3 50 9. 36 Jim received all the initial payments on September 1, 2005 and P3,240 of monthly fees during the period September 1 through December 31, 2005. In its December 31, 2005 balance sheet, what amount should Jim report as deferred revenue? а. 3,300 b. 4,380 c. 6,600 d. 9,900 (AICPA) 11. Motor Co. sells service contracts that cover a 2-year period. The sale price of each contract is P2,000. Motor Co. sold 1,000 contracts evenly throughout 20x1. Based on Motor Co.'s past experience, 40% of contracts sold are earned in the first year of the contract and 60% in the second year. Approximately, how much are the current and noncurrent portions of the deferred revenue on December 31, 20x1? a. 1,366,667; 550,000 b. 1,250,000; 630,000 c. 1,000,000; 600,000 d. 870,000; 430,000 12. Cow Co, sells gift certificates that expire within a year. During 20x1, Cow Co. sold gift certificates worth P200,000, of which P108,000 were redeemed. Cow Co. expects that 10% of the gift certificates sold will not be redeemed. Under PFRS 15, what amounts of (1) total revenue and (2) liability should be reported in Cow Co.'s 20x1 financial statements? a. 108,000; 72,000 b. 128,000; 72,000 c. 120,000; 72,000 d. 120,000; 80,000
the first of two equal installments of P72,000 for the annual Chapter 1 48 13. Mimi Co. sells gift certificates that expire one year after issuance. Information on gift certificates is shown below: Gift card liability, Jan. 1, 20x1 Gift certificates sold during 20x1 Prior year gift certificates redeemed in 20x1 Gift certificates sold and redeemed in 20x1 P120,000 1,000,000 112,000 760,000 Mimi's past experience indicates that 5% of gift certificates sold are never redecmed. Under PFRS 15, what amounts of (1) total revenue and (2) liability should be reported in Mimi Co's 20x1 financial staternents? a. 760,000; 198,000 b. 872,000; 190,000 c. 920,000; 200,000 d. 930,000; 208,000 14. An entity received cash of P24,000 on August 1 for one-year's rent in advance and recorded the transaction on that day as a credit to unearned rent revenue for the full amount. The December 31 adjusting entry is: a. Rent revenue 10,000 Unearned rent revenue 10,000 b. Unearned rent revenue 24,000 Rent revenue 24,000 C. Rent revenue 14,000 Unearned rent revenue 14,000 d. Unearned rent revenue 10,000 Rent revenue 10,000 15. Entity D acquired a piece of land on April 1, 20x1. The purchase price was reduced by a credit for the real property taxes accrued during the year. Entity D records real propery taxes at each month-end by adjusting the prepaid tax or ta payable account as appropriate. On May 1, 20x1 Entity D pa real property taxes. The entry to record the payment or ta on May 1, 20x1 includes a., a debit to real property tax expense of P48,000.
Transcribed Image Text:the first of two equal installments of P72,000 for the annual Chapter 1 48 13. Mimi Co. sells gift certificates that expire one year after issuance. Information on gift certificates is shown below: Gift card liability, Jan. 1, 20x1 Gift certificates sold during 20x1 Prior year gift certificates redeemed in 20x1 Gift certificates sold and redeemed in 20x1 P120,000 1,000,000 112,000 760,000 Mimi's past experience indicates that 5% of gift certificates sold are never redecmed. Under PFRS 15, what amounts of (1) total revenue and (2) liability should be reported in Mimi Co's 20x1 financial staternents? a. 760,000; 198,000 b. 872,000; 190,000 c. 920,000; 200,000 d. 930,000; 208,000 14. An entity received cash of P24,000 on August 1 for one-year's rent in advance and recorded the transaction on that day as a credit to unearned rent revenue for the full amount. The December 31 adjusting entry is: a. Rent revenue 10,000 Unearned rent revenue 10,000 b. Unearned rent revenue 24,000 Rent revenue 24,000 C. Rent revenue 14,000 Unearned rent revenue 14,000 d. Unearned rent revenue 10,000 Rent revenue 10,000 15. Entity D acquired a piece of land on April 1, 20x1. The purchase price was reduced by a credit for the real property taxes accrued during the year. Entity D records real propery taxes at each month-end by adjusting the prepaid tax or ta payable account as appropriate. On May 1, 20x1 Entity D pa real property taxes. The entry to record the payment or ta on May 1, 20x1 includes a., a debit to real property tax expense of P48,000.
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