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le include tv 1, 10% note term note a le are 10-yea

le include tv 1, 10% note term note a le are 10-yea

FINANCIAL ACCOUNTING
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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Canton Cave Company provided the following schedule of liabilities on December 31, 2014: P6,500,000 Accounts payable Unearned revenue 5,000,000 Notes payable - bank (a) 8,000,000 Bonds payable (b) 4,000,000 Additional Information: a. Bank notes payable include two separate notes payable to First Bank: • A P3 million, 10% note issued March 1, 2014, payable on demand. Interest is payable every 6 months. • A one-year term note amounting to P5 million, with 11% interest issued on January 2, 2014. b. The bonds payable are 10-year, 8% bonds, issued June 30, 2013. Interest is payable semi-annually on June 30 and December 31. C. There is a pending litigation against Canton Cave Company because for copyright issues. The legal counsel estimates that the company would have to pay P4,000,000 in damages expected to be settled within 12 months. He assesses that the chance the company would pay is probable. d. During the year, Canton Cave introduced a new product that carries a warranty against defects. Expected warranty claims amount to 8% of total sales. Total sales for 2014 is 2,000,000 and the actual warranty expenditures is 70,000. The company recorded actual warranty expenditures directly as warranty expense. Present a partial statement of financial position, showing the current liabilities and noncurrent liabilities and the total liabilities. Follow the format below. (10 pts.) Format: <Name of Company> Statement of Financial Position As of <date> Liabilities Current liabilities XX XX <amount> Noncurrent liabilities XX XX <amount> TOTAL LIABILITIES <AMOUNT> Total current liabilities Total noncurrent liabilities <amount> <amount> <amount> <amount>
Transcribed Image Text:Canton Cave Company provided the following schedule of liabilities on December 31, 2014: P6,500,000 Accounts payable Unearned revenue 5,000,000 Notes payable - bank (a) 8,000,000 Bonds payable (b) 4,000,000 Additional Information: a. Bank notes payable include two separate notes payable to First Bank: • A P3 million, 10% note issued March 1, 2014, payable on demand. Interest is payable every 6 months. • A one-year term note amounting to P5 million, with 11% interest issued on January 2, 2014. b. The bonds payable are 10-year, 8% bonds, issued June 30, 2013. Interest is payable semi-annually on June 30 and December 31. C. There is a pending litigation against Canton Cave Company because for copyright issues. The legal counsel estimates that the company would have to pay P4,000,000 in damages expected to be settled within 12 months. He assesses that the chance the company would pay is probable. d. During the year, Canton Cave introduced a new product that carries a warranty against defects. Expected warranty claims amount to 8% of total sales. Total sales for 2014 is 2,000,000 and the actual warranty expenditures is 70,000. The company recorded actual warranty expenditures directly as warranty expense. Present a partial statement of financial position, showing the current liabilities and noncurrent liabilities and the total liabilities. Follow the format below. (10 pts.) Format: <Name of Company> Statement of Financial Position As of <date> Liabilities Current liabilities XX XX <amount> Noncurrent liabilities XX XX <amount> TOTAL LIABILITIES <AMOUNT> Total current liabilities Total noncurrent liabilities <amount> <amount> <amount> <amount>
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