account balances Manufacturings 2021 financial statements were issued on April 1, 2022 Accounts receivable $ 90,000 Accounts payable 46,600 15 notes, payable to bank 654,000 Mortgage note payable 1,253,000 Other information The bank notes, issued August 1, 2021, are due on July 31, 2022, and pay interest at a rate of 15 , payable at maturity The mortgage note is due on March 1, 2022 Interest at 14 has been paid up to December 31 (assume 14 is a realistic rate) Manufacturing intended at December 31, 2021, to refinance the note on its due date with a new 10 year mortgage note In fact, on March 1, Manufacturing paid $252,000 in cash on the principal balance and refinanced the remaining $1,001,000 Included in the accounts receivable balance at December 31, 2021, were two subsidiary accounts that had been overpaid and had credit balances totaling $15,350 The accounts were of two major customers who were expected to order more merchandise from Manufacturing and apply the overpayments to those future purchases On November 1, 2021, Manufacturing rented a portion of its factory to a tenant for $31,800 per year, payable in advance The payment for the 12 months ended October 31, 2022, was received as required and was credited to rent revenue Required 1 Prepare any necessary adjusting journal entries at December 31, 2021, pertaining to each item of other information (ad) 2 Prepare the current and long term liability sections of the December 31, 2021, balance sheet Carnes Electronics sells consumer electronics that carry a 90 day manufacturers warranty At the time of purchase, customers are offered the opportunity to also buy a two year extended warranty for an additional charge During the year, Carnes received $420,000 for these extended warranties (approximately evenly throughout the year) Required 1 a Does this situation represent a loss contingency 1 b How should it be accounted for 2 Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that should be recorded during the year

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on May 31, 2024

account balances. Manufacturings 2021 financial statements were issued on April 1, 2022. Accounts receivable $ 90,000 Accounts payable 46,600 15% notes, payable to bank 654,000

account balances. Manufacturings 2021 financial statements were issued on April 1, 2022.


Accounts receivable	$	90,000
Accounts payable		46,600
15% notes, payable to bank		654,000
Mortgage note payable		1,253,000

Other information:

The bank notes, issued August 1, 2021, are due on July 31, 2022, and pay interest at a rate of 15%, payable at maturity.
The mortgage note is due on March 1, 2022. Interest at 14% has been paid up to December 31 (assume 14% is a realistic rate). Manufacturing intended at December 31, 2021, to refinance the note on its due date with a new 10-year mortgage note. In fact, on March 1, Manufacturing paid $252,000 in cash on the principal balance and refinanced the remaining $1,001,000.
Included in the accounts receivable balance at December 31, 2021, were two subsidiary accounts that had been overpaid and had credit balances totaling $15,350. The accounts were of two major customers who were expected to order more merchandise from Manufacturing and apply the overpayments to those future purchases.
On November 1, 2021, Manufacturing rented a portion of its factory to a tenant for $31,800 per year, payable in advance. The payment for the 12 months ended October 31, 2022, was received as required and was credited to rent revenue.

Required: 1. Prepare any necessary adjusting journal entries at December 31, 2021, pertaining to each item of other information (ad). 2. Prepare the current and long-term liability sections of the December 31, 2021, balance sheet.

Carnes Electronics sells consumer electronics that carry a 90-day manufacturers warranty. At the time of purchase, customers are offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes received $420,000 for these extended warranties (approximately evenly throughout the year). Required: 1-a. Does this situation represent a loss contingency? 1.b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that should be recorded during the year.