Accrued Liability
1. _Container’s Outstanding_ Represents cash received from customers refundable once the
returnable containers of the seller that needs to be returned is indeed returned.
2. __VAT___________ An entity is required to pay this to the government arising from customers on
sales of tangible property and of certain services.
3. Christine Company has a bonus agreement which provides that the general manager shall receive
an annual bonus of 10% of the net income after bonus and tax. The income tax rate is 30%. The
general manager received 840,000 for the current year as bonus.
What is the income after bonus and tax?
a. 12,840,000 c. 8,400,000
b. 12,000,000 d. 11,160,000
4. Clarence company sells magazine subscriptions of one to three year periods. Cash receipts from
subscribers are credited to Unearned Magazine Subscriptions and this account had a balance of
2,400,000 on December 31, 2017. Outstanding subscriptions on December 31, 2017 expire as follows:
During 2018 800,000
During 2019 1,000,000
During 2020 600,000
What amount should be reported as Unearned subscriptions revenue at the end of December 31, 2019.
Answer: 600,000
5. Restie Company sells gift certificates, redeemable for store merchandise. The gift certificates
have no expiration date.
The entity has the following information pertaining to the gift certificate sales and redemptions:
Gift certificates payable on January 1, 2017 150,000
