YellowCard ASA manufactures accessories for iPods,iPhones, and iPads. It had the following selectedtransactions during calendar 2019. (For any part of thisproblem requiring an interest or discount rate, use 10%.)1. YellowCard provides a 2-year warranty on its dockingstations, which it began selling in 2019. YellowCardestimates that €45,000 will be spent in the future toservice warranties related to 2019 sales. During 2019,YellowCard spent €6,000 servicing warranty claims.2. YellowCard has a 1-year €200,000 loan outstandingfrom UBS. The loan is set to mature on February 28,2020. For several years, UBS has agreed to extend theloan, as long as YellowCard makes all of its quarterlyinterest payments (interest is due on the last days ofeach February, May, August, and November) andmaintains an acid-test ratio (also called quick ratio) ofat least 1.25. On December 10, 2019, UBS providedYellowCard a commitment letter indicating that UBS willextend the loan another 12 months, provided thatYellowCard makes the interest payment due onFebruary 28.3. During 2018, YellowCard constructed a smallmanufacturing facility specifically to manufacture oneparticular accessory. YellowCard paid the constructioncontractor €5,000,000 cash (which was the totalcontract price) and placed the facility into service onJanuary 1, 2019. Because of technological change,YellowCard anticipates that the manufacturing facilitywill be useful for no more than 10 years. The localgovernment where the facility is located required that,at the end of the 10-year period, YellowCard remediatethe facility so that it can be used as a communitycenter. YellowCard estimates the cost of remediation inthe future to be €500,000.AccountingPrepare all 2019 journal entries relating to (a)YellowCard's warranties, (b) YellowCard's loan from UBS,and (c) the new manufacturing facility that YellowCardopened on January 1, 2019.

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Answered: Prepare all 2019 journal entries…

Prepare all 2019 journal entries relating to (a) YellowCard's warranties, (b) YellowCard's loan from UBS, and (c) the new manufacturing facility that YellowCard opened on January 1, 2019.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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