1. Under state law, Stephen Company may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claims. The entity believes that actual unemployment claims will be 2% of eligible gross wages and has chosen to reimburse the state. Eligible gross wages are defined as the first P100,000 of gross wages paid to each employee. The entity had five employees, each of whom earned P200,000 during the current year. What amount should be reported as liability for unemployment claims at year-end?

A. 10,000

B. 15,000

C. 20,000

D. 0

2. Ryan Company sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts. are credited to unearned service contract revenue. This account had a balance of P720,000 on December 31, 2015 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of P180,000 on December 31, 2015. Outstanding service contracts on December 31, 2015 expire as follows:

During 2016 150,0000

During 2017 225,000

During 2018 100,000

What amount should be reported as unearned vice contract revenue on December 31, 2015?

A. 540,000

B. 475,000

C. 295,000

D. 245,000

3. Dunne Company sells equipment service contracts that cover a two-year period. The sale price of each contract is P600 The past experience is that, of the total pesos spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. The entity sold 1,000 contracts evenly. throughout 2015. What amount should be reported as deferred service revenue on December 31, 2015?

A. 540,000

B. 480,000

C. 360,000

D. 300,000