READ THE BELOW QUESTIONS CAREFULLY. 1. January 1: If Tiger sold, on net/30 credit terms, a Pinnacle with the 5-year extended warranty as a package, prepare all of the applicable journal entry or entries at the date of the delivery associated with the sales 2. January 5: Assume that Tiger transfers the $19,200 account receivable to Factoring Company for cash on a with-recourse basis. Tiger agrees with Factoring Company that a holdback of $700 is appropriate. Factoring Company pays Tiger $15,760 cash. Prepare the journal entry or entries to reflect the above situation 3. January 1: Ignore your answers to parts (1) and (2). Assume Tiger sells one Pinnacle to a customer without any extended warranty (only the Pinnacle itself is sold) on the following terms: a. Cash down pavment of $3.000.
READ THE BELOW QUESTIONS CAREFULLY. 1. January 1: If Tiger sold, on net/30 credit terms, a Pinnacle with the 5-year extended warranty as a package, prepare all of the applicable journal entry or entries at the date of the delivery associated with the sales 2. January 5: Assume that Tiger transfers the $19,200 account receivable to Factoring Company for cash on a with-recourse basis. Tiger agrees with Factoring Company that a holdback of $700 is appropriate. Factoring Company pays Tiger $15,760 cash. Prepare the journal entry or entries to reflect the above situation 3. January 1: Ignore your answers to parts (1) and (2). Assume Tiger sells one Pinnacle to a customer without any extended warranty (only the Pinnacle itself is sold) on the following terms: a. Cash down pavment of $3.000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![REQUIRED
READ THE BELOW QUESTIONS CAREFULLY.
1. January 1: If Tiger sold, on net/30 credit terms, a Pinnacle with the 5-year extended
warranty as a package, prepare all of the applicable journal entry or entries at the date of
the delivery associated with the sale.
2. January 5: Assume that Tiger transfers the $19,200 account receivable to Factoring
Company for cash on a with-recourse basis. Tiger agrees with Factoring Company that a
holdback of $700 is appropriate. Factoring Company pays Tiger $15,760 cash. Prepare
the journal entry or entries to reflect the above situation
3. January 1: Ignore your answers to parts (1) and (2). Assume Tiger sells one Pinnacle to a
customer without any extended warranty (only the Pinnacle itself is sold) on the following
terms:
a. Cash down payment of $3,000.
b. $15,000 Promissory note due three years from the date of sale. Stated interest rate
is 2%. Interest will be paid annually on December 31.
The market rate of interest for a similar note would be 6%. Assume Tiger is permitted to
recognize Fevenue at the date of sale. Prepare the journal entry or entries for the above
situation:
4. Decembér 31. Assume Tiger receives an interest payment relating to the promissory note
receivable [part (C) above]. Prepare the journal entry or entries for this situation](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F04655fa1-8a14-4287-9748-c095e4183a84%2F314052cf-2030-4243-990b-6c2ddef67272%2Ft0idg1q_processed.png&w=3840&q=75)
Transcribed Image Text:REQUIRED
READ THE BELOW QUESTIONS CAREFULLY.
1. January 1: If Tiger sold, on net/30 credit terms, a Pinnacle with the 5-year extended
warranty as a package, prepare all of the applicable journal entry or entries at the date of
the delivery associated with the sale.
2. January 5: Assume that Tiger transfers the $19,200 account receivable to Factoring
Company for cash on a with-recourse basis. Tiger agrees with Factoring Company that a
holdback of $700 is appropriate. Factoring Company pays Tiger $15,760 cash. Prepare
the journal entry or entries to reflect the above situation
3. January 1: Ignore your answers to parts (1) and (2). Assume Tiger sells one Pinnacle to a
customer without any extended warranty (only the Pinnacle itself is sold) on the following
terms:
a. Cash down payment of $3,000.
b. $15,000 Promissory note due three years from the date of sale. Stated interest rate
is 2%. Interest will be paid annually on December 31.
The market rate of interest for a similar note would be 6%. Assume Tiger is permitted to
recognize Fevenue at the date of sale. Prepare the journal entry or entries for the above
situation:
4. Decembér 31. Assume Tiger receives an interest payment relating to the promissory note
receivable [part (C) above]. Prepare the journal entry or entries for this situation
Transcribed Image Text:Tiger Limited is a manufacturer of high-powered computers. Tiger's computers are sold with a typical
assurance-type warranty of twelve months. At the time of a sale, the purchaser has the option to buy the
computer with a 5-year extended warranty. The 5-years would begin after the end of the six-month
assurance-type warranty. If the purchaser chooses not to buy the 5-year extended warranty at the time of
the purchase, the purchaser can still buy the 5-year extended warranty up to six months later. The following
information is available regarding the manufacturer's "Pinnacle" model of computer:
a. When a Pinnacle is purchased as a package with the 5-year extended warranty, the selling price for
the package is $19,200. This special offer is only available at the time of the initial purchase.
b. If the 5-year optional extended warranty were to be purchased by itself (separate from the
computer), the price would be $2,000.
c. The normal selling price of a Pinnacle with the assurance warranty, but without the 5-year extended
warranty, is $18,000. The cost of goods is $12,600 and Tiger uses a perpetual inventory system.
d. Tiger estimates that its Pinnacle computer will have assurance-type warranty claims of 3.5% of the
normal selling price of the computer.
In all applicable situations, Tiger uses the gross method.
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