ACCRUED SALARIES. SUD Company’s salaried employees are paid biweekly.

Occasionally, advances made

to employees are paid back by payroll deductions. Information relating to salaries for the calendar year 2031 is
as follows:
12/31/30 12/31/31
Employee advances P 24,000 P 36,000
Accrued salaries payable 182,000 ?
Salaries expense during the year 1,820,000
Salaries paid during the year (net of employee advances) 1,750,000
At December 31, 2031, what amount should SUD report for accrued salaries payable?

ACCRUED LIABILITY. Anglin Corporation must determine the December 31, 2030 year – end accruals for
advertising and rent expenses. A P50,000 advertising bill was received January 10, 2031, comprising costs of
P37,500 for advertisements in December 2030 issues, and P12,500 for advertisements in January 2031 issues
of the newspaper.

A store lease, effective December 16, 2009, calls for fixed rent of P120,000 per month, payable one month from
the effective date and monthly thereafter. In addition, rent equal to to 5% of net sales over P6,000,000 per
calendar year is payable on January 31, of the following year. Net sales for 2030 were P7,500,000.

What is the total accrued liabilities that should be reported by Anglin Corporation on its financial position as at
December 31, 2030?

BONUS. ABG Co. has a contract with its president to pay her a 5% bonus for 2030 and 2031. The income tax
rate is 30% during these two years.

In 2030, income before deductions for the bonus and federal income taxes was P400,000. If the bonus is based
on income before deduction of the bonus but after deduction of income tax, the bonus (to the nearest peso) is

In 2031, income before deductions for the bonus and federal income taxes was P600,000. If the bonus is based
on income after deductions for the bonus and income tax, the bonus (to the nearest peso) is

BONUS. Some of the information you gathered in the audit of the financial statement of AXN CORP. are:
1. The president is to receive a bonus consisting of a basic amount equivalent to 5% of the company’s net
income before deduction of bonus but after deduction of corporate income tax.
2. In addition, the basic bonus will be increased by the company’s tax savings because the total amount of
bonus is deductible in computing the company’s taxable income. The tax savings is the difference between
the income tax the company would have paid if there were no bonus and the taxes the company must pay
after deducting the bonus.
3. AXN CORPORATION reported a net income of P280,000 in 2027 before deduction of the president’s
bonus and the corporate income tax.
4. The company is subject to a corporate income tax of 35% of its net income after deducting the president’s
bonus.
Compute for the total amount of bonus the president should receive in 2027:
Compute for the net profit for 2027 after deducting the president’s bonus and the corporate income tax.

COMMISSION. DRACO COMPANY pays its sales representatives fixed monthly salaries and commissions on
net sales. Commissions are computed and paid on a monthly basis (in the month following the month of sales)
net of fixed salaries. However, if the fixed monthly salaries exceed their sales commissions earned for the month,
such excess is not charged back to them. Pertinent data for the month of March 2027 are as follows:
SALES REP FIXED SALARY NET SALES COMMISSION RATE
A P 25,000 P1,000,000 2%
B 35,000 2,000,000 3%
C 45,000 3,000,000 3%
What amount should DRACO COMPANY accrue as sales commission payable in March 2027?

GIFT CERTIFICATE. MUG Department Store sells gift certificates redeemable only when merchandise is
purchased. These gift certificates have an expiration date of two years after issuance date. Upon redemption of
expiration, MUG recognizes the unearned revenue as realized. Information for 2031 is as follows:
Unearned revenue, 1/1 650,000
Gift certificates sold 2,250,000
Gift certificates redeemed 1, 950,000 The 60% cost of goods sold is not relevant
Expired gift certificate 100,000 to determining unearned revenue because
unearned revenue is concerned only with the
Cost of goods sold 60% cash received from gift certificates that have
not yet been redeemed for goods. COGS
would only come into play once the
certificates are redeemed, and the revenue is
recognized.
On December 31, 2031 what amount should MUG report unearned revenue?

CONTAINERS’DEPOSIT LIABILITY. UK Company sells its products is reusable containers. The customer is
charged a deposit for each container delivered and receives a refund for each container returned within two
years after the year of delivery. UK accounts for the containers not returned within the time limit as being retired
by sale at the deposit amount. Information for 2031 is as follows:
Container deposits on December 31, 2030 from deliveries in:
2029 150,000
2030 430,000
Deposits for containers delivered in 2031 780,000
Deposits for containers returned in 2031 from deliveries in:
2029 90,000
2030 250,000
2031 286,000
1. In the December 31, 2031 statement of financial position, what is the liability for deposits on returnable
containers?
2. Determine the expired amount of containers deposit.
NOTES PAYABLE. On July 1, 2027, ABB Manufacturing Co. issued a five-year note payable with a face amount
of P2,500,000 and an interest rate of 10 percent. The terms of the note require ABB Manufacturing Company to
make five annual payments of P500,000 plus accrued interest, with the first payment due June 30, 2028. With
respect to the note, the current liabilities section of ABB’s December 31, 2027, balance sheet should include:

CLASSIFICATION. The December 31 trial balance of the Ruel Corporation includes, among others, the
following:
Long-term Notes – which are payable in annual installment
of P10,000 on February 1 of each year P 60,000
Rental income received in advance 16,000
Notes payable, which are trade notes, with the exception of P20,000
Notes payable to bank on June 30 of the following year 60,000
Accounts payable which include account with debit balance of P2,000 80,000
Notes Receivable which have been reduced by notes discounted of
P20,000 that are not yet due and on which the Corporation is
contingently liable 100,000
Accounts Receivable, which include accounts with credit balances
of P10,000 and past due accounts of P6,000 on which a loss
of 80% is anticipated 200,000
Merchandise Inventory, which includes goods held for consignment,
P8,000, and goods received on December 31 of P12,000; neither
of these items having been recorded as a purchase 180,000

1. What is the amount of the current liabilities on December 31?

2. The long-term debt at year-end is