1. Ford Motor estimates expenses relating to a quality-assurance warranty on its cars that were sold.
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Identify transaction(s) with a variable consideration
1. Ford Motor estimates expenses relating to a quality-assurance warranty on its cars that were sold.
2. An attorney is entitled to 40% of the award to his/her client if the litigation is won, and nothing if the litigation is lost.
3. An accounting firm charges every audit client $10,000 plus $150 per hour.
4. As a promotion of it new store, Acme Inc. mailed $25 voucher to every family in a city. Acme estimates that customers will probably redeem three-fourth of all vouchers.
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- Tom&Dick sells computer software. All credittransactions are done through credit cards, so there is a100% probability of receiving the money, but there is await of up to 10 days while the transaction is beingprocessed. When Tom&Dick prepares financialstatements at the end of its first business year, it should*a. exclude accounts receivable, because customersmay not pay b. include accounts receivable as an assetbecause of the matching principle c. exclude accountsreceivable as the amount is variable with interest ratesd. include accounts receivable as an asset because ofthe cost principle e. none of the aboveSpringer Products wishes to borrow $90,000 from a local bank using its accounts receivable to secure the loan. The bank's policy is to accept as collateral any accounts that are normally paid within 30 days of the end of the credit period, as long as the average age of the account is not greater than the customer's average payment period. Springer's accounts receivable, their average ages, and the average payment period for each customer are shown in the following table: Customer Accounts Receivable Average age of account Average payment period of customer A $11,000 42 days 50 days B $25,000 70 days 65 days C $10,000 48 days 45 days D $28,000 55 days 50 days E $14,000 50 days 60 days F $19,000 21 days 35 days G $30,000 10 days 30 days H $16,000 25 days 40 days…The Yankee Corporation has recently begun to accept credit cards. On July 7, Year 1, Yankee made a credit card sale of $600. Assume that the credit card fee is recorded on the date of sale and that the credit card company charges a fee of 3% for handling a credit card transaction. Which of the following correctly shows the effects of the sale on July 7? Assets 600 A. B. 582 C. 582 D. 600 Multiple Choice O Balance Sheet Liabilities + 18 ΝΑ ΝΑ ΝΑ Option B Option D Option C Option A Stockholders' Equity 582 582 582 600 Revenue 582 600 600 600 Income Statement Expense = Net Income Statement of Cash Flows ΝΑ ΝΑ 18 582 0A 18 ΝΑ 582 582 582 600 ΝΑ ΝΑ
- Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions: A. March 31: Emperor provides cleaning services for 25 pools during the month of March at a sales price per pool of $610 cash. Emperor records warranty estimates when sales are recognized and bases warranty estimates on 1 percent of sales. B. April 5: A customer files a warranty claim that Emperor honors in the amount of $130 cash. C. April 13: Another customer, J. Jones, files a warranty claim that Emperor does not honor due to customer negligence. D. June 8: J. Jones files a lawsuit requesting damages related to the dishonored warranty in the amount of $2,100. Emperor determines that the lawsuit is likely to end in the plaintiff's favor and the $2,100 is a reasonable estimate for damages. Prepare any necessary journal entries for each situation. If an amount box does not require an entry, leave it blank. If no…Question: The following transactions apply to Ozark Sales for Year 1: 1. The business was started when the company received $48,500 from the issue of common stock. 2. Purchased equipment inventory of $175,000 on account. 3. Sold equipment for $204,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $129,500. 4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. 5. Paid the sales tax to the state agency on $154,500 of the sales. 6. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 6 percent interest rate and matured on March 1, Year 2. 7. Paid $5,700 for warranty repairs during the year. 8. Paid operating expenses of $56,000 for the year. 9. Paid $124,100 of accounts payable. 10. Recorded accrued interest on the note issued in transaction no. 6. 1. Prepare the income statement for Year 1. 2.…The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems. Jan. 3 Loaned $18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10 Sold merchandise on account to Bradford & Co., $24,000. The cost of the merchandise sold was $14,400. 13 Sold merchandise on account to Dry Creek Co., $60,000. The cost of merchandise sold was $54,000. Mar. 12 Accepted a 60-day, 7% note for $24,000 from Bradford & Co. on account. 14 Accepted a 60-day, 9% note for $60,000 from Dry Creek Co. on account. Apr. 3 Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account. Use a compound journal entry with debits before credits.) May 11 Received from Bradford & Co. the amount due on the note of March 12. 13 Dry Creek Co.…
- Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately 4% of sales. Sales for the month of December are $400,000. Actual warranty expenditures in January of the following year were $13,000. Required: 1. Does this situation represent a contingent liability? 2. & 3. Record the necessary entries in the Journal Entry Worksheet below. 4. What is the balance in the Warranty Liability account after the entries in Parts 2 and 3?Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately 6% of sales. Sales for the month of December are $600,000. Actual warranty expenditures in January of the following year were $13,000.Required:1. Does this situation represent a contingent liability? Why or why not?2. Record warranty expense and warranty liability for the month of December based on 6% of sales.3. Record the payment of the actual warranty expenditures of $13,000 in January of the following year. 4. What is the balance in the Warranty Liability account after the entries in requirements 2 and 3?! Required information [The following information applies to the questions displayed below.] Steve's Outdoor Company purchased a new delivery van on January 1 for $56,000 plus $4,800 in sales tax. The company paid $13,800 cash on the van (including the sales tax), signing an 8 percent note for the $47,000 balance due in nine months (on September 30). On January 2, the company paid cash of $900 to have the company name and logo painted on the van. On September 30, the company paid the balance due on the van plus the interest. On December 31 (the end of the accounting period), Steve's Outdoor recorded depreciation on the van using the straight-line method with an estimated useful life of 5 years and an estimated residual value of $5,600. 5. What would be the net book value of the van at the end of Year 2? (Amounts to be deducted should be indicated by a minus sign.) Net book value of van at end of Year 2 Net book value at end of year 2 0
- 36 On March 1, Terrell & Associates provides legal services to Whole Grain Bakery regarding some recent food poisoning complaints. Legal services total $9,700. In payment for the services, Whole Grain Bakery signs a 10% note requiring the payment of the face amount and interest to Terrell & Associates on September 1. 1 Required: For Whole Grain Bakery, record the issuance of the note payable on March 1 and the cash payment on September 1. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) polnts еВook Hint View transaction list Print References Journal entry worksheet 1 2 > Record the issuance of the note payable for the legal services received. Note: Enter debits before credits. Date General Journal Debit Credit March 01 Mc Graw Hill EducationEmperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions: A. March 31: Emperor provides cleaning services for 25 pools during the month of March at a sales price per pool of $610 cash. Emperor records warranty estimates when sales are recognized and bases warranty estimates on 1 percent of sales. B. April 5: A customer files a warranty claim that Emperor honors in the amount of $130 cash. C. April 13: Another customer, J. Jones, files a warranty claim that Emperor does not honor due to customer negligence. D. June 8: J. Jones files a lawsuit requesting damages related to the dishonored warranty in the amount of $2,100. Emperor determines that the lawsuit is likely to end in the plaintiff's favor and the $2,100 is a reasonable estimate for damages. Prepare any necessary journal entries for each situation. If an amount box does not require an entry, leave it blank. If no…Dec. 2 Paid $1,060 cash to Northview Mall for Security First’ share of mall advertising costs. Dec. 3 Paid $520 cash for minor repairs to the company’s computer. Dec. 4 Received $6,900 cash from Brady Engineering Co. for the receivable from November. Dec. 10 Paid cash to Zahara Hughes for six days of work at the rate of $160 per day. Dec. 14 Notified by Brady Engineering Co. that Security First’ bid of $7,100 on a proposed project has been accepted. Brady paid a $1,550 cash advance to Security First. Dec. 15 Purchased $2,250 of computer supplies on credit from Arnold Office Products. Dec. 16 Sent a reminder to Jackson Co. to pay the fee for services recorded on November 8. Dec. 20 Completed a project for Masters Corporation and received $7,900 cash. Dec. 22-26 Took the week off for the holidays. Dec. 28 Received $4,400 cash from Jackson Co. on its receivable. Dec. 29 Reimbursed K. Hughes for business automobile mileage…
