12. Cow Co. sells gift certificates that expire within a year. During20x1, Cow Co. sold gift certificates worth P200,000, of whichP108,000 were redeemed. Cow Co. expects that 10% of the giftcertificates sold will not be redeemed. Under PFRS 15, whatamounts of (1) total revenue and (2) liability should bereported in Cow Co.'s 20x1 financial statements?a. 108,000; 72,000b. 128,000; 72,000c. 120,000; 72,000d. 120,000; 80,000

Revenue recognition principle says that revenue should only be recognised in business, when earned.…

Answered: 12. Cow Co. sells gift certificates…

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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At Dec. 31, 2019. H&M Co. had gift certificates outstanding, which had been sold to customers during 2019 for P 100 each H& M operates on a gross margin of 60% of its sales. What amount of revenue pertaining to the 10,000 outstanding gift certificates should be deferred at Dec. 31, 2019. * A.N one B.400,000 C.600,000 D.1,000,000
B. At December 31, 2020, Hersheys Company had 1,000 gift certificates outstanding, which had been sold tocustomers during 2020 for P720. Laser operates on a gross margin of 60%. 2. How much revenue pertaining to the gift certificates should be deferred at December 31, 2020?
Siomai Corp. sells gift certificates redeemable only when merchandise is purchased. The certificates have an expiration date two years after issuance. Upon redemption or expiration, Siomai recognizes the unearned revenue as realized. Data for the year are as follows:  Unearned revenue, January 1, 2021- P3,000,000 Gift certificates sold- P10,000,000  Gift certificates redeemed- P8,200,000 Expired gift certificates- P600,000  Cost of goods sold- 60% On December 31, 2021, Siomai should report unearned revenues of:
At December 31, 2021, Suo’s Boutique had 2,000 gift certificates outstanding, which had been sold to customers during 2021 for P50 each. Sue’s operates on a gross margin of 60% of its sales. What amount of revenue pertaining to the 2,000 outstanding gift certificates should be deferred at December 31, 2021? a. P0 b. P40,000. c. P60,000. d. P100,000.
3. Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85% 2023 15,000 90% Required: Prepare journal entries from 2020 to 2023.
3. Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85% 2023 15,000 90% Required: Prepare journal entries from 2020 to 2023.
On January 31st, 2021, X Co. transfers $400,000 in receivables to Cater Finance with recourse. Cater charges a fee of 4% of the Account Receivable. X estimates a $3,000 recourse liability. Cater will immediately remit 90% of the factored receivables to X, and retain 10%. When Cater collects the remaining receivables, it remits the amount, less the fee, to X. X estimates that the fair value of the final 10% of the receivables is $25,000. X will record a Loss on Sale of Receivables of 34,000 9,000 25,000 40,000
13. Bizarre Company gives warranties at the time of sale to purchasers of its product. The entity undertakes to make good, by repair or replacement, manufacturing defects that become apparent within one year from the date of sale. Sales of P10,000,000 were made evenly throughout 2011. The expenditures for warranty repairs and replacements for the products sold in 2011 are expected to be made 50% in 2011 and 50% in 2012. The 2012 outflows of economic benefits related to the warranty will take place on June 30, 2012. Experience indicates that 95% of products sold require no warranty repairs, 3% of products sold require minor repairs costing 10% of the sale price, and 2% of products sold require major repairs or replacement costing 90% of sale price. The appropriate discount factor for cash flows expected to occur on June 30, 2012 is 0.95. An appropriate risk adjustment factor to reflect the uncertainties in the cash flow estimates is an increment of 6% to the probability- weighted…
15. On January 1, 200A, ABC rendered services to XYZ at a price of P450,000. ABC received P500,000 5-year promissory note from XYZ to be paid in full on December 200E. Assume the use of straight line method to amortized any premium or discount on note receivable, the total amount of income ABC realized from this transaction for 200A would be
1. WALNUT Department Store sells gift certificates, redeemable for store merchandise that expires one year after their issuance. WALNUT has the following information pertaining to its gift certificates sales and redemptions: Unearned at December 31, 2020 - ₱600,000; 2021 sales - ₱2,000,000; 2021 redemptions of prior-years sales -₱200,000; 2021 redemptions of current-year sales-₱1,400,000. In its December 31, 2021 statement of financial position, what amount should WALNUT report as unearned revenue? 2.On December 31, 2021, PISTACHIO Company had outstanding ₱20 million face value convertible bonds maturing on December 31, 2024. Interest is payable annually on December 31. Each ₱1,000 bond is convertible into 60 shares of PISTACHIO’s ₱P10 par ordinary shares. The unamortized premium balance on December 31, 2021 is ₱350,000. The balance of Share premium arising from bond conversion privilege is ₱640,000. On this date, assume that on December 31, 2021, PISTACHIO retired the ₱2,000,000 issue…
12. On February 1, 2021, MARIGOLD Company factored receivables with a carrying amount of ₱300,000 to SUNFLOWER Company. SUNFLOWER Company assesses a finance charge of 3% of the receivables and retains 5% of the receivable for possible sales returns. Relative to this transaction, you are to determine the amount of loss on sale or factoring to be reported in the income statement of MARIGOLD Company for February. Assume that MARIGOLD factors the receivables on a without recourse basis. The loss to be reported is? * a. ₱ 24,000 b. ₱ 15,000 c. ₱ 9,000 d. ₱ -0-
Aa.15. On December 31, Year 1, Cardinal Company bought some new equipment that cost $25,000 and signed a Note Payable [NP] for $20,000. The remaining amount was paid in cash at the time of the purchase. The NP requires six equal semi-annual payments starting on June 30, Year 2. The principal and the interest expense related to the NP will be completely paid off on December 31, Year 4 as a result of these six equal payments. The note states an interest rate of 8% with semi-annual compounding on the payment dates. Answer the following: 1. What will be the size of each of the six semi-annual payments? $________ 2. How much Interest Expense will appear in Cardinal’s income statement for the year ended Dec. 31, Year 2? $___________ 3. What is the carrying value of the Note Payable in Cardinal’s balance sheet dated Dec. 31, Year 3? $_______

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