Reference no: EM132952943
Questions -
Q1. On December 31, 2017, Ding Inc. authorized Cook to operate as a franchise for an initial franchise fee of P 3,400,000. P 900,000 was received upon signing the contract, and the balance is to be paid by a non-interest bearing note, due in five equal annual installments beginning December 31, 2018. Prevailing market rate is 12%. PVF should be up to 5 decimals. The down payment is nonrefundable and it represents a fair measure of the services already performed by Ding, however, with regards to the balance, substantial future services are still required. How much is the deferred revenue to be recognized as of December 31, 2017?
a. 1,802,390
b. 2,500,000
c. 1,518,677
d. 2,702,390
Q2. On July 31, 2008, the home office in Manila establishes a sales agency in Bulacan. The following assets are sent to the agency:
Cash (working fund to be operated under the imprest system) 22,000
Samples of merchandise 36,000
During the month of August, the following transactions occurred:
The sales agency submits sales order of P 272,000, sales per invoice was billed at P 268,000. Cost of sales to customers is P 124,000.
Collections during the month amount to P 58,200, net of 3% discount.
Home office disbursements chargeable to the agency are as follows:
Furniture 40,000
Salaries for the month 21,600
Annual rent of office space 36,000
On August 31, the sales agency working fund is replenished. Paid vouchers submitted by the sales agency amounting to P 17,925. Samples are useful until December 31, 2007 which, at this time, are believed to have a salvage value of 15% of cost. Furniture is depreciated at 18% per annum.
What is the net profit of the sales agency for the month of August?
a. 91,425 c. 92,955
b. 93,225 d. 58,425
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