Assume the following balances at the end of the

19. Assume the following balances at the end of the current
year:
Capital Liquidated 1,800,000
Accumulated Depletion 2,500,000
Retained Earnings 1,500,000
Depletion based on 50,000 units extracted @P20 per unit
1,000,000
Inventory of resource deposit 5,000 units
What is the maximum dividend that can be declared by the company?
a. 2,100,000 c.2, 200,000
b.2, 000,000 d.1, 500,000
20. Marie Company sells gift certificates redeemable only when
merchandise is purchased. These gift certificates have an
expiration date of two years after issuance date. Upon redemption
or expiration, Marie recognizes the unearned revenue as realized.
Information for 2017 as follows:
Gift certificate payable 12/31/2016 520,000
Gift certificate payable 12/31/2017 680,000
Gift certificate redeemed 1,560,000
Expired gift certificates 80,000
Cost of goods sold 80%
How much Gift certificates sold during the year?
21. PRC Company began selling a new calculator that carried a
two year warranty against defects in 2007.

PRACTICAL ACCOUNTING 1
PRC projected the estimated warranty cost (as a percent of sales)
as follows:
First year warranty 4%
Second year warranty 10%
Sales and actual warranty repairs were:
2007 2008
Sales 5,000,000 9,000,000
Actual warranty repairs 390,000 900,000
What is the estimated warranty liability on December 31, 2017?
22. On December 31, 2017 Colt Company is experiencing extreme
financial pressure and is in default in meeting interest payment
on its long term note of P6, 000,000 due on December 31, 2019.
The interest rate is 12% payable every December 31.
In an agreement with the creditor, Colt obtained the following changes
in the terms of note:
The present value of 1 at12% for four periods is 0.6355 and the
present value of an ordinary annuity of 1 at 12% for four periods is
3.0373.
How much is the gain or loss on extinguishment?
a . 2,504,750 c. 1,888,338
b. 1,168,338 d. 0