Chapter 2, Problem 2.7BE

Euphoria Company had a balance of P820,000 in the professional fees expense account on December 31, 2020, before considering year-end adjustments relating to the following:➢ Consultants were hired for a special project at a total fee not to exceed P650,000. The entity had recorded P550,000 of these fees based on building for work performed in 2020.➢ The attorney’s letter requested by the auditor dated Jan. 31, 2021, indicated that legal fees of P60,000 were billed on Jan. 15, 2021 for worked performed in Nov. 2020, and the unbilled fees for Dec. 31, 2020 were P70,000.What amount should be reported as professional fees expense for the year ended December 31, 2020?

The following are three independent situations. 1.   Hairston Stamp Company records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Hairston’s past experience indicates that only 80% of the stamps sold to licensees will be redeemed. Hairston’s liability for stamp redemptions was $13,000,000 at ­December 31, 2019. Additional information for 2020 is as follows. Stamp service revenue from stamps sold to licensees0000      $9,500,000 Cost of redemptions (stamps sold prior to 1/1/20)0000 6,000,000 c.   If all the stamps sold in 2020 were presented for redemption in 2021, the redemption cost would be $5,200,000. What amount should Hairston report as a liability for stamp redemptions at December 31, 2020? 2.   In packages of its products, Burnitz Inc. includes coupons that may be presented at retail stores to obtain discounts on other Burnitz products. Retailers are reimbursed for the face amount of coupons redeemed plus 10%…

The following transaction occurred during Dec 31, 2021, for the Microchip Company. On August 1, 2021, collected 120000 in advance on rent from another company that is renting a portion of Microchip's factory.  THe $12,000 represents one year's rent and the entire amount was credited to deferred rent revenue.