I have the excel sheets already prepared for this questions -- there is just no way to attach them nor can I type them in to make sense. Is there a way I could send them to someone to help with this question. I know it is a big module and most of it I have found on here but once you get towards the end there isn't as much information.

Assignment 8.2 - Biltrite Modules XII and XIII

This week's Biltrite assignment consists of two different modules related to two types of liabilities - product warranty (Module XII) and note payable (Module XIII).Please read Modules XII and XIII in Biltrite Modules XII-XIII attached below.

For Module XII, please do requirements 2, 5, 6 and 7 as follows:

1.Open the file titled "2009 warranty.xls"

2.Perform the tasks described in Requirement 2.Here are some hints:

a.The amount of AJE No. 1 is $2,503,060.

b.The amount of AJE No. 1 is $854,154.

c.After you enter those audit adjustments at the bottom of the schedule, the Audited Cost of Goods Sold should be $231,157,214.

3.For Requirement 5, the cells and years shown in the requirement are incorrect.The cells should be D44, E44, and F44, and the years should be 2006 - 2008.

4.Follow the instructions for Requirements 6 and 7

For Module XIII, please do Requirement 2 as follows:

1.Open the file titled "2009 notes.xls"

2.Perform the tasks described in Requirement 2.Companies often record their debt in a long-term liability account throughout the year.At the end of each quarter/year, the company calculates the amount of debt that will be due in the next 12 months (the current portion) and reclassifies it to the current installments account.In this case, the client did not perform this reclassification so the auditor is recording the reclassification.Here are some hints related to the determination of the current installments:

a.For the 10% mortgage note payable, refer to the 3^rd sentence in the 2^nd paragraph to find the current installment.

b.For the 12% note payable, the 2^nd sentence of the 3^rd paragraph states the number of installments.If you divide the total note payable amount (found at the end of the 1^st paragraph) by the number of installments, you will determine the current installment.

c.These two amounts will be the debits of RJE C.Add the two together, and you will arrive at the credit amount.

d.For the lead schedule (WP 14), enter the amounts from RJE C into the Reclassifications column.Please note that all of the accounts in RJE C normally have credit balances because they are all liabilities.Therefore, if the adjustment is a credit, the balance in the account would increase.If the adjustment is a debit, the amount should be shown in parenthesis on the lead schedule and should result in a reduction in the 12/31/07 per ledger balance.

e.Hint:look at the top section of WP 14.3 to see what the audited balance of accounts 2110 and 2130 should be.

Module XII: Estimated Liability for Product Warranty

All Biltrite products are sold under a one-year warranty covering all parts and labor. Repairs are performed locally, either by the dealer who sold the bicycle or by local entities licensed as official Biltrite bicycle repair shops. Biltrite reimburses the dealers and shops for labor and parts. Reimbursement is based on work orders submitted by the repairing agency. The customer signs the work orders, and the serial number of the product repaired also appears on each work order. Defective parts or products replaced must be returned with the accompanying work order. The parts and products are received and logged in on color-coded receiving reports designed for returns. At the end of each month, the following standard journal entry is posted as an adjustment to the estimated product warranty. 8330 Product Warranty Expense 2070 Estimated Product Warranty Liability For 2009, the company applied 0.5% to the cost of goods sold in determining the amount of the monthly adjustment. Debits to account 2070 are for reimbursements and for product and parts replacements. Defective parts and products are "zero-valued" and placed in the rework department. Derick has asked you to analyze product warranty and determine the appropriate balance in the liability account. He has already provided you with a partially completed document and a client-prepared analysis of returns over the past four years. You have completed the document and are now ready to evaluate the adequacy of the balance.

Requirements

2) Scroll to the bottom of WP 20 and enter audit adjustments already made in previous modules that affect the cost of goods sold for 2009. You should identify the following adjustments. (If you weren't assigned the respective modules, ask your instructor for details regarding amounts and accounts.) AJE No. 1 (Module IV correction of repairs expense capitalized as factory equipment); and AJE No. 3 (2009 purchase recorded in 2010, detected in completing Module VI).

5) Enter equations in cells C44, D44, and E44 that will calculate the percentage of warranty claims to the cost of goods sold for each of the three years 2004-2006.

6) Note the percentage that now appears in cell B46 and the resulting adjustment to product warranty expense.

7) Draft AJE No. 12 on the document

Module XIII: Mortgage Note Payable and Note Payable to Bank Two

In addition to a deferred tax liability relating to the temporary book and tax depreciation differences, Biltrite's long-term liabilities consist of the following: 10% mortgage note payable to Dallas Dollar Bank$60 million; and 12% note payable to Bank Two$45 million. In 2004, Biltrite upgraded its manufacturing facilities at a cost of $150 million. The project was financed by issuing 2 million shares of common stock at $25 per share, and by issuing a $100 million 10% mortgage note payable to Dallas Dollar Bank. The mortgage agreement requires repayment in ten annual installments of $10 million each. Interest on the unpaid principal is payable on the first day of each month. The principal installments are due on January 1. The next payment is due on 1/1/10. The 12% note payable to Bank Two was issued to alleviate the effects of the liquidity problems encountered in 2009. This note is unsecured and requires repayment in ten equal annual installments. Unlike the Dollar Bank mortgage loan, interest on the Bank Two loan is payable annually. The first principal installment, together with interest, is due on 3/1/10. This note contains restrictive covenants, as described earlier, relating to a $10 million compensating balance requirement and restrictions regarding further borrowing and dividend payments. Derick has asked that you analyze the long-term notes payable, being particularly alert to any violations of the restrictive covenants contained in the Bank Two loan agreement.

Requirements

2) Record Reclassification Journal Entry C for the current portion of both notes as of 12/31/07, and enter the amounts in WP 14.3. Now scroll up to WP 14, the lead schedule for notes payable and interest. Post your reclassifications to the lead schedule.