Problem 1

Current
Notes payable:
from customers 3,000,000
from bank loans
advances from affiliates
Trade accounts payable 4,000,000
Bank overdraft 300,000
Cash dividends payable 1,000,000
Mortgage payable
Accrued interest on mortgage payable 760,000
Income taxes payable 800,000
Stock dividends payable -
Deferred taxes payable
Property dividends payable 850,000
Accounts payable from officers 200,000
Credit balance in customer's accounts due to overpayments 350,000
Loans payable, 5 years, maturing on December 31, 2024
Accrued interest on loans payable 600,000
Bonds payable, 4 years, maturing on June 30, 2020 3,000,000
Bonds payable, 6 years, maturing on July 1, 2023
Accrued salaries, wages, and other expenses 280,000
Unearned rental income 500,000
4-year notes payable 2,500,000
3-year loans payable
Total 18,140,000
 Problem 2
Noncurrent
Requirement 1

2,000,000 Basketball-premium
500,000 Cash
To record the purchase of basketball as premium.

3,800,000 Requirement 2

Premium expense [(4,125,000/5,500) x 4,000]

- Basketball-premium
750,000 To record the distribution of basketball.

Requirement 3
3,000,000
Premium expense
Estimated premium payable
2,650,000 To record the estimated liability for premium.

Total box tops 100,000

2,000,000 Redemption rate x 60%
14,700,000 Boxtops to be redeemed 60,000
Boxtops to presented / 10
Premiums to be distributed 6,000
Cost per premium x 750
Total expenses 4,500,000
Total payments 3,000,000
Liability 1,500,000
 Problem 3

Requirement 1

4,125,000 Cash rebate expense

4,125,000 Estimated cash rebate payable
etball as premium. To record the establishment of cash rebate pro

Requirement 2

3,000,000 Estimated cash rebate payable

3,000,000 Cash
To record the payment of cash rebate.

Requirement 3

1,500,000 Liability 300,000

1,500,000
y for premium.

Total CDs sold 20,000

Redemption rate x 80%
Cash coupons to be redeemed 16,000
Cash rebate per coupon 50
Total cash rebate payable 800,000
Total cash rebate paid 500,000
Liability 300,000
 Problem 4

Requirement 1

800,000 Cash discount coupon expense

800,000 Estimated cash discount coupon pay
shment of cash rebate program. To record the establishment of cash

Requirement 2

500,000 Estimated cash discount coupon payable

500,000 Cash
nt of cash rebate. To record the payment to retailers.

Requirement 3

Liability

Face value of the cash discount coupons to be

(600,000 x 70%)
Reimbursement rate
Total cash discount coupon payable
Total payments to suppliers
Liability
 Problem 5

Stand-alone selling price for the sale

Stand-alone selling price for the poi
462,000 Total
cash discount coupon payable 462,000
the establishment of cash discount coupon payable. Product sale
Points
Total transaction price

unt coupon payable 220,000 Deferred revenue

220,000 Points redeemed
the payment to retailers. Cumulative amount
Prior year
Current year

242,000 Requirement 1

Cash

h discount coupons to be redeemed

420,000
x 110%
oupon payable 462,000
220,000 Requirement 2
242,000
Unearned revenue-point

Requirement 2

Unearned revenue-point
 Problem 6

ne selling price for the sale 100,000

ne selling price for the points (1,000 x 9.50) 9,500
109,500 1. To record the initial sa

100,000 x (1,000/1,095) 91,324

100,000 x (95/1,095) 8,676
saction price 100,000 2. To set up the estimate

2019 2020
8,676 8,676
450/950 850/970 3. To record the actual w
4,110 7,603
0 4,110
4,110 3,493
Problem 7

[70% x (3,350,000 x 20%)

[70% x (2,555,000 x 80%)
100,000 Expected cash outflow
Sales revenue 91,324 Risk adjutsment factor (1
Unearned revenue-points 8,676 Estimated amount of pro
To record the initial sale.

Problem 8

{[75% x (5,560,000 x 35%

Unearned revenue-points 4,110 {[75% x (3,455,000 x 65%
Sales 4,110 Expected cash outflow
To record the redemption of points. Risk adjutsment factor (2
Estimated amount of pro

Unearned revenue-points 3,493

Sales 3,493
To record the redemption of points.
 Accrual approach:

1. To record the initial sale. Cash

Sales revenue

2. To set up the estimated warranty expense. Warranty expense (50,000,000 x 6%)

Estimated warranty payable

3. To record the actual warranty costs. Estimated warranty payable

Cash

[70% x (3,350,000 x 20%)] 469,000

[70% x (2,555,000 x 80%)] 1,430,800
Expected cash outflow 1,899,800
Risk adjutsment factor (1,899,800 x 11%) 208,978
Estimated amount of provisions 2,108,778

{[75% x (5,560,000 x 35%)] x 0.79} 1,153,005

{[75% x (3,455,000 x 65%)] x 0.79} 1,330,607
Expected cash outflow 2,483,612
Risk adjutsment factor (2,483,612 x 12%) 298,033
Estimated amount of provisions 2,781,645
 Expense-as-incurred approach:

50,000,000 Cash
50,000,000 Sales revenue

3,000,000 No journal entries

3,000,000

2,500,000 Warranty expense

2,500,000 Cash
50,000,000
50,000,000

2,500,000
2,500,000
Problem 1

Memorandum entry method:

1. To record the authorization to issue bonds. Memorandum: TIDE Company is authorize

with face value of P1,000.00 pe

2. To record the issuance of the bonds. Cash

Bonds payable

Problem 2

Cash (4,000 x 1,800) 7,200,000

Bonds payable (4,000 x 1,000) 4,000,000
Premium on bonds payable 3,200,000

Cash (2,000 x 800) 1,600,000

Discount on bonds payable 400,000
Bonds payable (2,000 x 1,000) 2,000,000

Problem 3

Cash (3,000 x 1,800) 5,400,000

Bonds payable (3,000 x 1,000) 3,000,000
Premium on bonds payable 2,400,000

Premium on bonds payable 120,000

Cash 120,000

Cash (3,000 x 800) 2,400,000

Discount on bonds payable 600,000
Bonds payable (3,000 x 1,000) 3,000,000

Discount on bonds payable 60,000

Cash 60,000

Problem 4

Cash (3,000,000 x 110%) 3,300,000

Bonds payable 3,000,000
Premium on bonds payable 300,000
Problem 5

Cash 3,906,667
Discount on bonds payable 200,000
Bonds payable 4,000,000
Interest expense 106,667

Issue price (4,000,000 x 95%) 3,800,000

Add: accrued interest (4,000,000 x 8% x 4/12) 106,667
Total cash received 3,906,667

Problem 6

Date IP (4%) IE (6%) Amortz'n Balance

2,176,320
6/30/19 96,000 130,579 34,579 2,210,899
12/31/19 96,000 132,654 36,654 2,247,553
6/30/20 96,000 134,853 38,853 2,286,406
12/31/20 96,000 137,184 41,184 2,327,591
6/30/21 96,000 139,655 43,655 2,371,246
12/31/21 96,000 124,754 28,754 2,400,000

Requirement 1

Bonds payable 2,400,000

Interest expense 96,000
Cash/Bond sinking fund 2,496,000

Requirement 2

Bonds payable 2,400,000

Interest expense 96,000
Loss on early retirement of bonds 89,594
Cash/Bond sinking fund 2,472,000
Discount on bonds payable 113,594

Requirement 3

Bonds payable 2,400,000

Interest expense 96,000
Loss on early retirement of bonds 473,594
Cash/Bond sinking fund 2,856,000
 Discount on bonds payable 113,594

Problem 8 (7)

Cash (4,000,000 x 120%) 4,800,000

Bonds payable 4,000,000
Premium on bonds payable 200,000
Share warrants outstanding 600,000

Problem 9 (8)

Cash (6,000,000 x 125%) 7,500,000

Discount on bonds payable 60,000
Bonds payable 6,000,000
Coversion privilege-share premium 1,560,000
 Journal entry method:

dum: TIDE Company is authorized to issue bonds 8,000 bonds Unissued bonds payable
with face value of P1,000.00 per bond on January 1, 2019. Authorized bonds payable

4,000,000 Cash
Bonds payable 4,000,000 Unissued bonds payable
 8,000,000
d bonds payable 8,000,000

4,000,000
bonds payable 4,000,000
Problem 1

Requirement 1 Requirement 2

PV of principal (2,400,000 x 0.71) 1,704,000 Semiannual

PV of interests (96,000 x 4.92) 472,320 1
Total present value 2,176,320 2
Face value 2,400,000 3
Discount on bonds payable 223,680 4
Total semiannual periods / 6 5
Annual amortizations 37,280 6
Total

Date Amortz'n Discount Balance

223,680 2,176,320
6/30/19 37,280 186,400 2,213,600
12/31/19 37,280 149,120 2,250,880
6/30/20 37,280 111,840 2,288,160
12/31/20 37,280 74,560 2,325,440
6/30/21 37,280 37,280 2,362,720
12/31/21 37,280 - 2,400,000
 Requirement 3

Balance Fractions 223,680 x 24/84 = 63,909 Date IP (4%)

2,400,000 (24/84) 223,680 x 20/84 = 53,257
2,000,000 (20/84) 223,680 x 16/84 = 42,606 6/30/19 96,000
1,600,000 (16/84) 223,680 x 12/84 = 31,954 12/31/19 96,000
1,200,000 (12/84) 223,680 x 08/84 = 21,303 6/30/20 96,000
800,000 (08/84) 223,680 x 04/84 = 10,651 12/31/20 96,000
400,000 (04/84) 223,680 6/30/21 96,000
8,400,000 12/31/21 96,000

Date Amortz'n Discount Balance

223,680 2,176,320
6/30/19 63,909 159,771 2,240,229
12/31/19 53,257 106,514 2,293,486
6/30/20 42,606 63,908 2,336,092
12/31/20 31,954 31,954 2,368,046
6/30/21 21,303 10,651 2,389,349
12/31/21 10,651 - 2,400,000
IE (6%) Amortz'n Balance
2,176,320
130,579 34,579 2,210,899
132,654 36,654 2,247,553
134,853 38,853 2,286,406
137,184 41,184 2,327,591
139,655 43,655 2,371,246
124,754 28,754 2,400,000
Problem 1

For 2019:

Jan-01 Land 5,000,000

Notes payable 5,000,000

Dec-31 Interest expense 527,500

Accrued interest expense 527,500

For 2020:

Dec-31 Interest expense 527,500

Accrued interest expense 527,500

For 2021:

Dec-31 Interest expense 527,500

Accrued interest expense 527,500

For 2022:

Dec-31 Interest expense 527,500

Accrued interest expense 527,500

For 2023:

Dec-31 Notes payable 5,000,000

Interest expense 527,500
Accrued interest expense 2,110,000
Cash 7,637,500

or

Notes payable 5,000,000

Accrued interest expense 2,637,500
Cash 7,637,500
Problem 2

For 2019:

Jan-01 Land 4,500,000

Notes payable 4,500,000

Dec-31 Notes payable 900,000

Interest expense 517,500
Cash 1,417,500

For 2020:

Dec-31 Notes payable 900,000

Interest expense 414,000
Cash 1,314,000

For 2021:

Dec-31 Notes payable 900,000

Interest expense 310,500
Cash 1,210,500

For 2022:

Dec-31 Notes payable 900,000

Interest expense 207,000
Cash 1,107,000

For 2023:

Dec-31 Notes payable 900,000

Interest expense 103,500
Cash 1,003,500
Problem 3

Face value of the notes 6,000,000

PV of the notes (6,000,000 x 0.47) 2,820,000
Implied interest 3,180,000

Date IE (13.44%) Discount Balance

1/1/2019 3,180,000 2,820,000
2019 379,008 2,800,992 3,199,008
2020 429,947 2,371,045 3,628,955
2021 487,732 1,883,314 4,116,686
2022 553,283 1,330,031 4,669,969
2023 627,644 702,387 5,297,613
2024 702,387 - 6,000,000

For 2019:

Jan-01 Factory machine 2,820,000

Discount on notes payable 3,180,000
Notes payable 6,000,000

Dec-31 Interest expense 379,008

Discount on notes payable 379,008

For 2020:

Dec-31 Interest expense 429,947

Discount on notes payable 429,947

For 2021:

Dec-31 Interest expense 487,732

Discount on notes payable 487,732

For 2022:

Dec-31 Interest expense 553,283

Discount on notes payable 553,283

For 2023:

Dec-31 Interest expense 627,644

Discount on notes payable 627,644

For 2024:
Dec-31 Interest expense 702,387
Discount on notes payable 702,387

Notes payable 6,000,000

Cash 6,000,000
Problem 4 (bonus)

Face value of the notes 5,555,000

PV of the notes (697,375 x 4.60) 3,194,125
Implied interest 2,360,875

Date Payments IE (14.25%) Discount Principal Balance

1/1/2019 2,360,875 3,194,125
2019 694,375 455,163 1,905,712 239,212 2,954,913
2020 694,375 421,075 1,484,637 273,300 2,681,613
2021 694,375 382,130 1,102,507 312,245 2,369,368
2022 694,375 337,635 764,872 356,740 2,012,628
2023 694,375 286,799 478,073 407,576 1,605,052
2024 694,375 228,720 249,353 465,655 1,139,397
2025 694,375 162,364 86,989 532,011 607,386
2026 694,375 86,989 - 607,386 -

For 2019:

Jan-01 Machine
Discount on notes payable
Notes payable

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable

For 2020:

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable

For 2021:

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable
For 2022:

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable

For 2023:

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable

For 2024:

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable

For 2025:

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable

For 2026:

Dec-31 Notes payable

Cash

Interest expense
Discount on notes payable
3,194,125
2,360,875
5,555,000

694,375
694,375

455,163
455,163

694,375
694,375

421,075
421,075

694,375
694,375

382,130
382,130
694,375
694,375

337,635
337,635

694,375
694,375

286,799
286,799

694,375
694,375

228,720
228,720

694,375
694,375

162,364
162,364

694,375
694,375

86,989
86,989