Reference no: EM132826497
AUDIT LIABILITY
ASDF Corp. is a corporation focusing on the manufacturing of motorcycle pieces. The company started his fiscal year on April 1 and ends at March 31. The following information relates to the obligations of ASDF as of March 31, 2020.
Notes Payable
ASDF has signed several long-term notes with financial institutions. The maturities of these notes are given in the schedule below. The total unpaid interest for all of these notes amounts to P600, 000 on March 31, 2020.
Due Date Amount Due
April 1, 2020 400,000
July 1, 2020 600,000
October 1, 2020 300,000
January 1, 2021 300,000
April 1, 2021 - March 31, 2022 1,200,000
April 1, 2022 - March 31, 2023 1,000,000
April 1, 2023 - March 31, 2024 1,400,000
April 1, 2024 - March 31, 2025 800,000
April 1, 2025 - March 31, 2026 1,000,000
7,000,000
Bonds Payable
ASDF issued P10, 000,000 of 12% bonds on July 1, 2018. The prevailing market rate of interest for these bonds was 10% on the date of issue. The bonds will mature on July 1, 2028. Interest is paid annually starting July 1 of next year. ASDF uses the effective interest rate method to amortize bond premium or discount.
Estimated war
ASDF has a one-year product warranty on some selected items in its product line. The estimated warranty liability on sales made during the 2018-2019 fiscal year and still outstanding as of March 31, 2019 amounted to P180, 000. The warranty costs on sales made from April 1, 2019 through March 31, 2020, are estimated at P520, 000. The actual warranty costs incurred during the current 2019-2020 fiscal year are as follows: Warranty claims honored on 2018-2019 sales: P180, 000; warranty claims honored on 2019-2020 sales: P178,000 for a total of P358,000.
Payroll related items
Accrued salaries and wages= 300,000;
withholding taxes payable= 94,000;
other payroll deductions=10,000
Miscellaneous Accruals
Other accruals not separately classified amount to P150, 000 as of March 31, 2020.
Trade payables
Accounts payable for supplies, goods and services purchased on an open account amounted to P740, 000 as of March 31, 2020.
Dividends
On March 15, 2020, ASDF's BOD declared a cash dividend of P0.20 per ordinary share and a 10% share dividend. Both dividends were to be distributed on April 12, 2020, to the shareholders of record at the close of business on March 31, 2020. The number of shares issued and outstanding were 6,000,000 shares with a par value of P5.00 per share and a fair value of P22.00 per share on March 15, 2020, P21.50 per share on March 31, 2020 and P22.50 per share on April 12, 2020.
Requirements:
Problem a. Compute for the present value of the bonds on July 1, 2018.
Problem b. Compute for the non-current portion of ASDF's notes payable at March 31, 2020.
Problem c. Compute for the balance of the estimated warranties payable at March 31, 2020.
Problem d. What amount should ASDF record total current liabilities in its statement of financial position? How about the total non-current liabilities?