CASE 2 A. A fitness club gives clients a free month after they have paid for eleven months. Approximately half of their clients remain with the club long enough to take advantage of this offer. Required: 1. Define the term "Liability". Then explain whether the free month offer results in a liability for the fitness club. 2. Explain what makes a liability "current". Then explain whether the free month offer results in a current liability for the fitness club. 3. Define the term "contingent liability". Then explain whether the free month offer results in a contingent liability for the fitness club. B. During 2020, Peach Company purchased a machine for P7,000,000 and received a government grant of 1,000,000 toward the capital cost. The machine is to be depreciated on a straight-line method basis over 5 years and estimated to have a residual value of P500,000 at the end of this period. Required: Prepare journal entries using Deferred Income Approach and Deduction from Asset Approach. C. Jailbird Company provided the following data about the inventory for the month of January: Units Unit Cost Total Cost Jan. 1 Beginning 16,000 140 2,240,000 5 Purchase 4,000 150 600,000 10 Sales 15,000 15 Purchase 20,000 160 3,200,000 16 Purchase Return 1,000 160,000 25 Sales 8,000 26 Sales Return 4,000 31 Purchase 30,000 150 4,500,000 160 Required: Compute the total cost balances of Ending Inventory and Cost of Goods Sold using: (1) FIFO (2) LIFO (3) Periodic Weighted Average (4) Moving Average