Exercises/Short Answer

1. Warranty expense for a company was $350,000 for the year. They began the year with an $1,200,000 balance in their Allowance for warranty costs account, and ended the year with $1,175,000. How much was incurred for actual warranty costs during the year?

2. Please state the two conditions that must be met in order for a company to accrue a loss contingency

3. On November 1, 2018 Daniels Inc. borrowed $200,000 under a 6% promissory note that was due on April 30, 2019. Record to journal entries to accrue interest on this note as of December 31, 2018, and to pay it off on April 30, 2019.

4. Porter Co. recorded a cash sale of $250 that was subject to state sales tax rate of 10%. Prepare the journal entry to record this sale.

5. On July 31, 2016 Ernst Corporation called (i.e. redeemed) $10,000,000 par value of bonds payable at 103% of par value. At that time the bonds had an unamortized discount of $145,000. Prepare the journal entry to redeem these bonds.