The following unadjusted balances appear in the current liabilities portion of POR Inc's Statement of Financial Position as of December 31, 2020:

Current Liabilities Accounts Payable, trade Php 2, 675, 000

Provision for warranties 1, 460, 800

Provision for premium 1, 064, 588

Accrued compensated absences 745, 800

Total

Audit notes:

a. The company started its 2-year warranty program on sales starting 2018. The company estimates that 60% of items sold during the year will ultimately be brought back to the company for repairs free of any additional charges to customers. The company estimated that it will incur an average of P200 per unit in parts and labor. The estimated repair cost is expected to increase at the rate of 10% per year. Relevant information about the warranty program appears below:

2018 2019 2020

Sales in number of units 13, 000 14,000 14, 600

Actual warranty costs 624, 000 1, 323, 200 1, 923, 700

Warranty records reveal that P702, 000 and P152, 000 of the costs incurred in 2019 and 2020 respectively relates to 2018 sales while P943, 00 of costs incurred in 2020 relates to 2019 sales. The balance of the Provision for warranties account represented the accrual in 2019, adjustments is yet to be made at year end.

b. The company also started a promotional program in 2018, where upon presentation of accumulated officials receipts amounting to P5, 000 a customer shall be receiving a gift certificate (GC) with a face value of P500 each. The gift certificates can be redeemed by customers to participating department stores up to 3 years from receipt. Department stores are reimbursement and the face value of the certificates plus 10% processing fee. Relevant information about this promotional program appears below:

c. 2018 2019 2020

Sales in pesos P45, 500, 000 P56, 875, 000 P69, 560, 000

Actual payments made to Dept stores 2, 240, 000 3, 790, 000 4, 210, 000

The company estimates that 70% of the accumulated official receipts shall be presented by customers to receive the GCs 10% of which will never be presented to department stores for redemption. The balance of the Provision for Premiums account reflected the year end accrual in 2019. Adjustment for the current year is yet to be made.

d. Employees are given 15 days vacation and 15 days sick leaves for every year of service. Unused leaves earned during the current year can be carried over the following year thereafter, the same shall be fortified. Relevant information about the liability for compensated absences were as follows:

2018 2019 2020

2017 and prior unused leaves 620 days 125 days 125 days

2018 unused leaves 980 days 540 days 150 days

2019 unused leaves 1, 030 days 620 days

2020 unused leaves 1, 210 days

Average daily salary rate P400 P440 P460

The balance of the accrued compensated absences represented the monetary value of the total unused leaves at the end of 2019. No adjustments were made to the account at year end.

e. Starting the current year, the BOD has approved the provision for key officers bonus to be computed at 10% based on adjusted net income after bonus ad after 35% income tax. The unadjusted net income per records was at P4, 366, 727.

Required:

34. What is the correct estimated liability for warranties as of December 31, 2020?

a. 1, 566, 020

b. 1, 648, 020

c. 1, 112, 100

d. 1, 345, 200

35. What is the correct estimated liability for premiums as of December 31, 2020?

a. 1, 675, 096

b. 1, 345, 096

c. 1, 083, 901

d. 591, 905

36. What is the correct estimated liability for compensated absences as of December 31, 2019?

a. 690, 800

b. 745, 800

c. 704, 000

d. 915, 400

37. What is the correct estimated liability for compensated absences as of December 31, 2020?

a. 910, 800

b. 841, 800

c. 968, 300

d. 915, 400

38. What is the adjusted net income before bonus and before income tax?

a. 3, 500, 000

b. 3, 445, 000

c. 3, 400, 000

d. 3, 325, 000

39. What is the correct accrued bonus at the end of the year?

a. 213, 615

b. 215, 423

c. 207, 512

d. 202, 934