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Nationalian Inc., a dealer of household appliances, sells washing machines at an average price of...

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Accounting

Nationalian Inc., a dealer of household appliances, sells washing machines at an average price of P8,100. The company also offers to each customer a separate 3-year warranty contract for P810 that requires the company to provide periodic maintenance services and to replace defective parts.

During 2018, Nationalian sold 300 washing machines and 270 warranty contracts for cash. The company estimates that the warranty costs are P180 for parts and P360 for labor.

Assume sales occured on Dec. 31, 2018. Nationalian's policy is to recognize income from the warranties on a straight-line basis. In 2019, Nationalian incurred actual costs relative to 2018 warranty sales of P18,000 for parts and P36,000 for labor.

What liability relative to these transactions would appear on the Dec. 31,2018, statement of financial position and how would its be classified?

a. Current : 72,900 / non current : 145,800

b. Current : 72,900 / non current : 72,900

c. Current : 0 / non current : 218,700

d. Current : 145,800 / non current : 72,900

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