Answer for this problems:Elisa Diaz Company produces computer software that Batangas Company sells. Diaz receives a royalty of 15% of sales. Batangas Company pays royalties to Diaz

Company on a semi-annual basis - on May 1 for sales made in July through December of the previous year and on November 1 for sales made in January through

June of the current year.

Royalty expense for Batangas Company and royalty income for Diaz Company in the amount of P600,000 were accrued on December 31, 2010. Cash in the

amounts of P600,000 and P1,000,000 was paid and received on May 1 and Nov 1, 2011, respectively. Software sales during the July to December 2011 period

totaled P15,000,000.

Required:

1.Calculate the amount of royalty expense for Batangas Company and royalty income for Diaz during 2011.

2.Record the adjusting entry that each company made on December 31, 2011

Problem #2: Accrual of Interest Expense

Florenda Quino Forwarders borrowed P600,000 from the bank on Sept 1, 2011. The note carried an 8% annual rate of interest and was set to mature on Feb

28, 2012. Interest and principal were paid in cash on the maturity date.

Required:

1.What was the amount of interest expense paid in cash in 2011?

2.What was the amount of interest expense recognized on the 2011 income statement?

3.What was the amount of total liabilities shown on the 2011 balance sheet?

4.What was the total amount of cash that was paid to the bank on Feb 28, 2012 for principal and interest?

5.What was the amount of interest expense shown on the 2012 income statement?