Question
Product A comes with a three year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in
Product A comes with a three year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale, 2% in the second year after the sale and 1% in the third year after the sale.
The following information relates to sales and warranty expenditures of Product A
YearSalesActual warranty expendituresYear 1$400,000$10,000Year 2$500,000$35,000Year 3$350,000$22,000
Which of the following is NOT part of the required journal entry in Year 1 based on the above information?
Debit warranty expense $10,000
None of the other alternatives are correct
Debit warranty expense $24,000
Credit cash $10,000
Credit sales $400,000
Company A sells a machine to Company B on September 1 for $27,000. The down payment to be paid by Company B is $3,000. Company B must pay monthly minimum payments of $265. 12% interest rate per annum on the unpaid balance is deducted from each payment and the balance is applied to reduce the principal outstanding.
Company B makes the following payments to Company A:
October 1$265November 1$265December 1$600January 2$265
Prepare partial amortization schedule in order to answer the following question.
In preparing an amortization schedule, what is the balance at the end of December?
$23,205
$23,590
None of the other alternatives are correct
$23,950
$22,870
On April 1, 2014, Able Co borrows $200,000 for four years from the Toy Company to obtain funds to buy a piece of commercial property. As collateral, Able Co. gives Toy Company a mortgage on the manufacturing plant that it owns and that are on its books at a cost of $50,000. Interest is charged on the unpaid balance of the loan principal at an interest rate of 4 percent per year compounded semiannually. Payments are due on April 1 and October 1 of each year. Able co agrees to make eight payments over the four years of the mortgage so that when the last payment is made on April 1, 2018, the loan and all interest will have been paid. The first seven payments are to be equal. The eighth payment is to be just large enough to discharge the balance of the loan. Able Co. closes its books annually on December 31 and uses the effective interest method.
Each equal payment from October 2014 to October 2018 is equal to (round to the nearest hundred):
$22,300
$27,300
None of the other alternatives are correct / Not enough data provided to calculate it
$22,200
$52,500
On January 1, 2011, Hoffman Company, a calendar year company, issued $75,000 of notes payable of which $15,000 is due on January 1 for each of the next 5 years. The proper Balance Sheet presentation on December 31, 2011, is
Current Liabilities $15,000 \ Long-Term Liabilities $60,000
Long term Liabilities $75,000
Current Liabilities $60,000 \ Long-Term Liabilities $15,000
Current Liabilities $75,000
None of the above
Product A comes with a two year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale and 5% in the second year after the sale.
The following information relates to sales and warranty expenditures of Product A
YearSalesActual warranty expendituresYear 1$400,000$10,000Year 2$500,000$35,000
Which of the following is NOT part of the required journal entry in Year 1 based on the above information?
Credit sales $400,000
Credit cash $10,000
Debit warranty expense $32,000
None of the other alternatives are correct
Debit warranty expense $12,000
The payroll for Atkinson Company at the end of March 31, 2013 consists of salaries of $ 50,000. The company portions of CPP and EI contributions are $ 2,475 and $ 1,059 respectively. A total of $ 15,000 in income taxes is withheld. The company also pays a monthly cost of $ 500 for a dental plan for its employees. How much would Atkinson Company record at the end of March regarding its payroll related expenses?
$ 57,992
$ 54,034
None of the other alternatives are correct
$ 53,534
$ 72,992
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