On January 1, 2016, IDAHU Inc., issued P 100,000, 10%, 10-year bonds when the market rate of interest was 8%. Interest is payable on June 30 and December 31. The following financial information is available.

SalesP 300,000

Cost of sales180,000

Gross income120,000

Interest expense?

Depreciation expense(14,500)

Other expenses(82,000)

Net income?

12/31/20161/1/2016

Accounts receivableP 55,000P 48,000

Inventory87,00093,000

Accounts payable60,00058,000

All purchases of inventory are on account. Other expenses are paid for in cash.

Q1. What is the carrying amount of the bonds on December 31, 2016?

a.P 112,661

b.P 113,592

c.P 100,000

d.P 112,233

Q2. What is the interest expenses for 2016?

a.P 8,641

b.P 10,000

c.P 9,069

d.P 4,544

Q3. How much was paid for inventory purchases?

a.P 172,000

b.P 186,000

c.P 184,000

d.P 174,000

Q4. What is the net income for 2016?

a.P 13,500

b.P 14,431

c.P 23,000

d.P 14,859

Q5. How much was received from the customers in 2016?

a.P 283,000

b.P 245,000

c.P 293,000

d.P 307,000

Love Company includes on coupon if each package it sells, A towel is offered as a premium to customers who send in 10 coupons:

20112012

Packages of cereal sold 500,000800,000

Number of towels purchased at P 40 per towel 30,00060,000

Number of towels distributed as premium20,00050,000

Number of towels to be distributed as

premium next period5,0003,000

Q6. What amount should be reported as premium expense in 2012?

a.P 2,400,000

b.P 2,000,000

c.P 2,120,000

d.P 1,920,000

Q7. Lovie Company offers three payment plans on its twelve-month contracts. Information on the three plans and the number of children enrolled in each plan for the September 1, 2011 through August 31, 2012 contract year follows:

Initial payment for childMonthly fee per childNumber of children

# 150,000-15

# 220,0003,00012

# 3-5,0009

Lovie Company received P 990,000 of initial payments on September 1, 2011 and P 324,000 of monthly fees during the period Sep. 1 through December 31, 2011. On December 31, 2011, what amount should be reported as deferred revenue?

a.P 330,000

b.P 438,000

c.P 660,000

d.P 990,000

Q8. Tobruk Company has an agreement to pay its sales manager a bonus of 5% of the income after bonus and after tax. The income for the year before bonus and tax is P 5,250,000. The income tax rate if 30% of income after bonus. What is the bonus for the year?

a. P 262,500

b. P 250,000

c. P 177,536

d. P 186,548

Q9. During 2011, Manfred Company guaranteed a supplier's P 500,000 loan from a bank. On October 1, 2011, Manfred Company was notified that the supplier had defaulted on the loan and filed for bankruptcy protection. Counsel believes Manfred will probably have to pay P 250,000 under its guarantee. As a result of the supplier's bankruptcy, Manfred entered into a contract in December 2011 to retool its machines so that Manfred could accept parts from other suppliers. Retooling costs are estimated to be P 300,000. What amount should be reported as liability on December 31, 2011?

a. P 250,000

b. P 450,000

c. P 550,000

d. P 750,000

Q10. Loob Company had the following loans at 12% interest payable at maturity. Loob repaid each loan on its scheduled date.

DateAmountMaturity DateTerm

11.1.2010500,00010/31/20111 year

2/1/20111,500,0007/31/20116 months

5/1/2011800,0001/31/20129 months

Loon records interest expense when the loans are repaid. As a result, interest expense ofP 150,000 was recorded in 2011. If no correction is made, by what amount would 2011 interest expense be understated?

a.P 54,000

b.P 62,000

c.P 64,000

d.P 72,000

Q11. Dean Company has P 2,000,000 note payable due June 30, 2012. At the financial statement date of December 31, 2011, Dean signed an agreement to borrow up to P 2,000,000 to refinance the note payable on a long term basis. The financing agreement called for borrowing not to exceed 80% of the value of the collateral Dean was providing. On December 31, 2011 the value of the collateral was P 3,000,000. Under the existing loan facility, Dean has the discretion to refinance or roll over the note payable for at least 12 months after the end of the reporting period.

On December 31, 2011, what amount of the note payable should Dean report as noncurrent liability?

a.P 2,000,000

b.P 2,400,000

c.P 3,000,000

d.P 0