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Liabs 2
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:
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: