Problem 4

The following information relates to Jerome Tuazon Electronics on Dec. 31, 2016. The entity uses the calendar year as its annual reporting period. The entity records deferrals in balance sheet accounts.

A) Weekly payroll is P84,000 paid every Friday for a five-day workweek. Assume that December 31,2016, falls on Wednesday so the employees will not be paid until Friday, Jan. 2, 2017.

B) Eighteen months earlier, on July 1, 2015, the entity purchased a service equipment that cost P100,000 and had no salvage value. Its useful life is estimated to be five years.

C) On Oct. 1, 2016, the entity agreed to work on a new housing development project. The contract is for the installation of home alarm systems for 24 new homes. The entity was paid P1,440,000 in advance on Oct. 1, 2016. By the end of the current year, works on 18 homes have been completed.

D) On Sept. 1, 2016, the entity purchased a one-year insurance policy for P12,000. E) On Dec. 29, 2016, upon comparison of service reports and billings, services rendered which remains unbilled totaled P50,000.