1
IA2 INTERMEDIATE ACCOUNTING
2 FINAL GRADING EXAMINATION
TEST BANK ON CURRENT
LIABILITIES-2026 LATEST
VERSION
Current Liabilities
1. Alhambra 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 Monthly
fees Number of
Plan per child per child children
#1 P500 P0 15
#2 200 30 12
#3 50 9
36
Alhambra received all 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 Alhambra report as
deferred revenue?
a. 9,900
b. 3,300
c. 6,600
d. 4,380
C = initial payments (500 x 15) + 200 x 12)= 9,900 x 8/12 = 6,600
2. The following are taken from the records of ABC Co. as of year-end.
Accounts payable 2,000 SSS contributions payable 6,000
Utilities payable 7,000 Cash dividends payable 4,000
Accrued interest expense 6,000 Property dividends payable 7,000
Advances from customers 1,000 Share dividends payable 3,000
Unearned rent 9,000 Lease liability 35,000
Warranty obligations 5,000 Bonds payable 120,000
Income taxes payable 2,000 Discount on bonds payable (15,000)
Preference shares issued 10,000 Security deposit 2,000
Constructive obligation 11,000 Redeemable preferences
shares issued 14,000
Obligation to deliver a Unearned interest
variable number of own on receivables 3,000
10,000
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shares worth a
fixed amount of cash
How much is the total financial liabilities to be disclosed in the notes?
a. 172,000
b. 185,000
c. 192,000
d. 225,000
Solution:
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Accounts payable 2,000
Utilities payable 7,000
Accrued interest expense 6,000
Obligation to deliver a variable number of own shares
worth a fixed amount of cash 10,000
Cash dividends payable 4,000
Finance lease liability 35,000
Bonds payable 120,000
Discount on bonds payable (15,000)
Security deposit 2,000
Redeemable preference shares 14,000
Total financial liabilities 185,000
Notes Payable
3. Entity A purchases a TV set on a 6-month installment basis. The installment price
is
₱120,000. However, if the TV set is purchased outright in cash, the cash
price
would have been ₱100,000. The payable will be initially recognized at
a. 100,000
b. 120,000
c. Present value of 120,000 discounted at the current market rate using 6
periods
d. None of these
4. Entity A purchases goods for ₱250,000 under a special credit period of 1 year.
The seller normally sells the goods for ₱220,000 with a credit period of one
month or with a ₱5,000 discount for cash basis (i.e., outright payment in
cash). The initial measurement of the payable is
a. 250,000
b. 220,000
c. 215,000
d. 200,000
Normal purchase price with credit period of one month 220,000
Discount for cash on delivery (5,000)
Cash price equivalent of the goods purchased 215,000
5. On January 1, 20x1, ABC Co. acquired transportation equipment in exchange
for
₱100,000 cash and ₱1,000,000, noninterest-bearing note payable due in 4 equal
annual installments. The first installment is due on January 1, 20x1. The
succeeding installment payments are due every December 31. The prevailing
rate of interest for this type of note is 12%. How much is the interest income in
20x1?
a. 120,000
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b. 102,055
c. 72,055
d. 50,702
Future cash flows – annual installments (₱1M ÷ 4) 250,000
Multiply by: PV of an annuity due of ₱1 @12%, n=4 3.401830
Present value of note payable - Jan. 1, 20x1 850,458
Amortization table: (Installment)
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IA2 INTERMEDIATE ACCOUNTING
2 FINAL GRADING EXAMINATION
TEST BANK ON CURRENT
LIABILITIES-2026 LATEST
VERSION
Current Liabilities
1. Alhambra 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 Monthly
fees Number of
Plan per child per child children
#1 P500 P0 15
#2 200 30 12
#3 50 9
36
Alhambra received all 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 Alhambra report as
deferred revenue?
a. 9,900
b. 3,300
c. 6,600
d. 4,380
C = initial payments (500 x 15) + 200 x 12)= 9,900 x 8/12 = 6,600
2. The following are taken from the records of ABC Co. as of year-end.
Accounts payable 2,000 SSS contributions payable 6,000
Utilities payable 7,000 Cash dividends payable 4,000
Accrued interest expense 6,000 Property dividends payable 7,000
Advances from customers 1,000 Share dividends payable 3,000
Unearned rent 9,000 Lease liability 35,000
Warranty obligations 5,000 Bonds payable 120,000
Income taxes payable 2,000 Discount on bonds payable (15,000)
Preference shares issued 10,000 Security deposit 2,000
Constructive obligation 11,000 Redeemable preferences
shares issued 14,000
Obligation to deliver a Unearned interest
variable number of own on receivables 3,000
10,000
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,2
shares worth a
fixed amount of cash
How much is the total financial liabilities to be disclosed in the notes?
a. 172,000
b. 185,000
c. 192,000
d. 225,000
Solution:
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Accounts payable 2,000
Utilities payable 7,000
Accrued interest expense 6,000
Obligation to deliver a variable number of own shares
worth a fixed amount of cash 10,000
Cash dividends payable 4,000
Finance lease liability 35,000
Bonds payable 120,000
Discount on bonds payable (15,000)
Security deposit 2,000
Redeemable preference shares 14,000
Total financial liabilities 185,000
Notes Payable
3. Entity A purchases a TV set on a 6-month installment basis. The installment price
is
₱120,000. However, if the TV set is purchased outright in cash, the cash
price
would have been ₱100,000. The payable will be initially recognized at
a. 100,000
b. 120,000
c. Present value of 120,000 discounted at the current market rate using 6
periods
d. None of these
4. Entity A purchases goods for ₱250,000 under a special credit period of 1 year.
The seller normally sells the goods for ₱220,000 with a credit period of one
month or with a ₱5,000 discount for cash basis (i.e., outright payment in
cash). The initial measurement of the payable is
a. 250,000
b. 220,000
c. 215,000
d. 200,000
Normal purchase price with credit period of one month 220,000
Discount for cash on delivery (5,000)
Cash price equivalent of the goods purchased 215,000
5. On January 1, 20x1, ABC Co. acquired transportation equipment in exchange
for
₱100,000 cash and ₱1,000,000, noninterest-bearing note payable due in 4 equal
annual installments. The first installment is due on January 1, 20x1. The
succeeding installment payments are due every December 31. The prevailing
rate of interest for this type of note is 12%. How much is the interest income in
20x1?
a. 120,000
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b. 102,055
c. 72,055
d. 50,702
Future cash flows – annual installments (₱1M ÷ 4) 250,000
Multiply by: PV of an annuity due of ₱1 @12%, n=4 3.401830
Present value of note payable - Jan. 1, 20x1 850,458
Amortization table: (Installment)
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