HALABATGANON CORP. has been producing quality disposable diapers for more than two decades. The company’s fiscal year runs from April 1 to March 31. The following information relates to the obligations of HALABATGANON as of March 31, 2012. Bonds Payable HALABATGANON issued P10,000,000 of 10% bonds on July 1, 2010. The prevailing market rate of interest for these bonds was 12% on the date of issue. The bonds will mature on July 1, 2020. Interest is paid semiannually on July 1 and January 1. HALABATGANON uses the effective interest rate method to amortize bond premium or discount. The following present value factors are taken from the present value tables:  Present value of 1 at 12% for 10 periods 0.32917  Present value of 1 at 6% for 20 periods 0.31180 Present value of an annuity of 1 at 12% for 10 periods 5.65022 Present value of an ordinary annuity of 1 at 6% for 20 periods11.46992 Notes Payable HALABATGANON has signed several long-term notes with financial institutions. The maturities of these notes are given in the schedule below. The total unpaid interest for all these notes amounts to P600,000 on March 31, 2012.                               Due Date         Amount Due Aril 1, 2012                          P   400,000 July 1, 2012                              600,000 October 1, 2012                   300,000 January 1, 2013                    300,000 April 1, 2013 − March 31, 2014    1,200,000 April 1, 2014 − March 31, 2015  1,000,000 April 1, 2015 − March 31, 2016  1,400,000 April 1, 2016 − March 31, 2017    800,000 April 1, 2017 − March 31, 2018    1,000,000 Estimated Warranties HALABATGANON has a one-year product warranty on some selected items in its product line. The estimated warranty liability on sales made during the 2010 – 2011 fiscal year and still outstanding as of March 31, 2011 amounted to P180,000. The warranty costs on sales made from April 1, 2011, through March 31, 2012, are estimated at P520,000. The actual warranty costs incurred during the current 2011 – 2012 fiscal year are as follows: Warranty claims honored on 2010 – 2011 sales P   180,000 Warranty claims honored on 2011 – 2012 sales     178,000 Total warranty claims honored P  358,000 Other Information.  TRADE PAYABLES Accounts payable for supplies, goods and services purchased on open account amount to P740,000 as of March 31, 2012. PAYROLL RELATED ITEMS Accrued salaries and wages P   300,000 Withholding waxes payable 94,000 Other payroll deductions    10,000 Total P  404,000 MISCELLANEOUS ACCRUALS Other accruals not separately classified amount to P150,000 as of March 31, 2012. DIVIDENDS On March 15, 2012, HALABATGANON’s board of directors declared a cash dividend of P0.20 per ordinary share and a 10% share dividend. Both dividends were to be distributed on April 12, 2012, to the shareholders of record at the close of business on March 31, 2012. Data regarding HALABATGANON ordinary share capital are as follows: Par value P  5.00 per share  Number of shares issued and outstanding 6,000,000shares Market values of ordinary shares: March 15, 2012 P22.00 per share March 31, 2012 21.50 per share April 12, 2012 22.50 per share   3.  The balance of the estimated warranties payable at March 31, 2012, is

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question
100%

HALABATGANON CORP. has been producing quality disposable diapers for more than two decades. The company’s fiscal year runs from April 1 to March 31. The following information relates to the obligations of HALABATGANON as of March 31, 2012.
Bonds Payable
HALABATGANON issued P10,000,000 of 10% bonds on July 1, 2010. The prevailing market rate of interest for these bonds was 12% on the date of issue. The bonds will mature on July 1, 2020. Interest is paid semiannually on July 1 and January 1. HALABATGANON uses the effective interest rate method to amortize bond premium or discount.

The following present value factors are taken from the present value tables: 
Present value of 1 at 12% for 10 periods 0.32917 
Present value of 1 at 6% for 20 periods 0.31180
Present value of an annuity of 1 at 12% for 10 periods 5.65022
Present value of an ordinary annuity of 1 at 6% for 20 periods11.46992

Notes Payable
HALABATGANON has signed several long-term notes with financial institutions. The maturities of these notes are given in the schedule below. The total unpaid interest for all these notes amounts to P600,000 on March 31, 2012.

                              Due Date         Amount Due
Aril 1, 2012                          P   400,000
July 1, 2012                              600,000
October 1, 2012                   300,000
January 1, 2013                    300,000
April 1, 2013 − March 31, 2014    1,200,000
April 1, 2014 − March 31, 2015  1,000,000
April 1, 2015 − March 31, 2016  1,400,000
April 1, 2016 − March 31, 2017    800,000
April 1, 2017 − March 31, 2018    1,000,000

Estimated Warranties
HALABATGANON has a one-year product warranty on some selected items in its product line. The estimated warranty liability on sales made during the 2010 – 2011 fiscal year and still outstanding as of March 31, 2011 amounted to P180,000. The warranty costs on sales made from April 1, 2011, through March 31, 2012, are estimated at P520,000. The actual warranty costs incurred during the current 2011 – 2012 fiscal year are as follows:

Warranty claims honored on 2010 – 2011 sales P   180,000
Warranty claims honored on 2011 – 2012 sales     178,000
Total warranty claims honored P  358,000

Other Information. 
TRADE PAYABLES
Accounts payable for supplies, goods and services purchased on open account amount to P740,000 as of March 31, 2012.

PAYROLL RELATED ITEMS
Accrued salaries and wages P   300,000
Withholding waxes payable 94,000
Other payroll deductions    10,000
Total P  404,000

MISCELLANEOUS ACCRUALS
Other accruals not separately classified amount to P150,000 as of March 31, 2012.

DIVIDENDS
On March 15, 2012, HALABATGANON’s board of directors declared a cash dividend of P0.20 per ordinary share and a 10% share dividend. Both dividends were to be distributed on April 12, 2012, to the shareholders of record at the close of business on March 31, 2012. Data regarding HALABATGANON ordinary share capital are as follows:
Par value P  5.00 per share 
Number of shares issued and outstanding 6,000,000shares

Market values of ordinary shares:
March 15, 2012 P22.00 per share
March 31, 2012 21.50 per share
April 12, 2012 22.50 per share

 


3.  The balance of the estimated warranties payable at March 31, 2012, is 

Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Bond Amortization
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education