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  • Liabs 2

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    Iohc Nedmi
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    Aristotle Corp. has various liabilities as of March 31, 2020 including bonds payable of P10 million issued in 2018 at 10% interest, notes payable of P7 million with various maturity dates, and estimated warranty liabilities of P520,000 for sales between April 1, 2019 to March 31, 2020. Aristotle also has accrued payroll liabilities of P304,000, accounts payable of P740,000, other accruals of P150,000, and declared cash and stock dividends of P0.20 per share and a 10% stock dividend to be distributed on April 15, 2020.

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    HO 2.2

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    Aristotle Corp. has various liabilities as of March 31, 2020 including bonds payable of P10 million issued in 2018 at 10% interest, notes payable of P7 million with various maturity dates, and estimated warranty liabilities of P520,000 for sales between April 1, 2019 to March 31, 2020. Aristotle also has accrued payroll liabilities of P304,000, accounts payable of P740,000, other accruals of P150,000, and declared cash and stock dividends of P0.20 per share and a 10% stock dividend to be distributed on April 15, 2020.

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    127 views3 pages

    Liabs 2

    Uploaded by

    Iohc Nedmi
    Aristotle Corp. has various liabilities as of March 31, 2020 including bonds payable of P10 million issued in 2018 at 10% interest, notes payable of P7 million with various maturity dates, and estimated warranty liabilities of P520,000 for sales between April 1, 2019 to March 31, 2020. Aristotle also has accrued payroll liabilities of P304,000, accounts payable of P740,000, other accruals of P150,000, and declared cash and stock dividends of P0.20 per share and a 10% stock dividend to be distributed on April 15, 2020.

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    of 3

    AUDITING PROBLEMS - LIABILITIES LIABS 2

    The ARISTOTLE CORP. has been producing quality shoes for more than three
    decades The company’s fiscal year runs from April 1 to March 31. The
    following refers to the obligations of ARISTOTLE as of March 31, 2020.
    BONDS PAYABLE
    ARISTOTLE issued P10,000,000 of 10% bonds on July 1, 2018. The
    prevailing market rate of interest for these bonds was 12% on the date of
    issue. The bonds will mature on July 1, 2028.
    Interest is paid semiannually on July 1 and January 1. ARISTOTLE uses the
    effective interest rate method to amortize bond premium or discount.
    NOTES PAYABLE
    ARISTOTLE has signed several long-term notes with banks. 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 P 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
    P 7,000,000

    ESTIMATED WARRANTIES
    ARISTOTEL 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 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 P180,000


    Warranty claims honored on 2019-2020 178,000
    Total warranty claims honored P 358,000

    OTHER INFORMATION REGARDING OTHER LIABILITIES:


    A. PAYROLL RELATED ITEMS:
    Accrued salaries and wages P300,000
    Withholding taxes payable 94,000
    Other payroll deductions (SSS, Phil. Health) 10,000

    B. TRADE ACCOUNTS PAYABLE


    Accounts payable for supplies, goods, and services purchases on the
    open account amounted to P740,000 as of March 31, 2020.

    C. MISCELLANEOUS ACCRUALS.
    Other accruals not separately classified amount to P150,000 as of March
    31, 2020.

    D. DIVIDENDS
    On March 15, 2020, ARISTOTLE’s BOARD OF DIRECTORS declared a cash
    dividend of P0.20 per common share and a 10% ordinary stock dividend.
    Both dividends were to be distributed on April 15, 2020, to the ordinary
    shareholders of record at the close of business on March 31, 2020. Data
    regarding ARISTOTLE ordinary shares are as follows:

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