Chapter 1 Problem 1-40 to 45
Problem 1-40 Answer B
Outstanding contracts on December 31, 2008 that will expire during
2009 150,000
2010 225,000
2011 100,000
Unearned service contract revenue 475,000
Problem 1-41 Answer A
The entire amount of P720,000 will be considered deferred revenue on December 31, 2008 because the subscriptions start with the January 2009 issue.
Problem 1-42 Answer A
Monthly subscriptions (7,200,000 / 12) 600,000
The subscriptions after the September 30 cut-off are:
October 600,000
November 600,000
December 600,000
Total unearned subscription revenue – December 31, 2008 1,800,000
The above subscriptions will be served in the next publication in 2009.
Problem 1-43 Answer C
Subscriptions received in 2008 that will expire in 2010 125,000
Subscriptions received in 2009 that will expire in 2010 200,000
Subscriptions received in 2009 that will expire in 2011 140,000
Unearned subscription revenue – December 31, 2009 465,000
Problem 1-44 Answer B
Liability for refundable deposit – January 1 150,000
Deposits made in 2008 (100,000 x 5) 500,000
Total 650,000
Less: Deposits refunded in 2008 (110,000 x 5) 550,000
Balance – December 31(current liability) 100,000
The lease deposit is a noncurrent liability.
Problem 1-45 Answer C
Advances – January 1 1,180,000
Advances received 1,840,000
Total 3,020,000
Advances applied (1,640,000)
Advances canceled ( 500,000)
Advances – December 31 880,000
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