Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 12, Problem 1PA
Consider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year).
A. A business sets up a line of credit with a supplier. The company purchases $10,000 worth of equipment on credit. Terms of purchase are 5/10, n/30.
B. A customer purchases a watering hose for $25. The sales tax rate is 5%.
C. Customers pay in advance for season tickets to a soccer game. There are fourteen customers, each paying $250 per season ticket. Each customer purchased two season tickets.
D. A company issues 2,000 shares of its common stock with a price per share of $15.
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Describe the revenue recognition policy that the company should follow:
Comfort Furniture sells household furniture. Customers can pay for the furniture at the time of delivery or they can wait one year to make payment. In the latter case, the customer must pay for the retail price of the furniture plus an additional 16 percent. If the customer decides to pay after one year, should Comfort Furniture report the additional 16 percent as part of the revenue from selling the furniture or should it be reported separately? Assume that the ability to collect the receivable is not an issue.
The Chair Company provides a 120-day parts-and-labor warranty on all merchandise it sells. The Chair Company estimates the
warranty expense for the current period to be $1,090. During the period a customer returned a product that cost $818 to repair.
Required
a. Show the effects of these transactions on the financial statements using a horizontal statements model like the example shown
here. Use a + to indicate increase or a – for decrease. if the element is not affected, leave the cell blank. In the Cash Flow column,
indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). (Not all cells will require
entry.)
CHAIR COMPANY
Horizontal Statements Model
Balance Sheet
Income Statement
Statement of
Stockholder's
Equity
Event
Assets
Liabilities +
Revenue
Expense = Net Income
Cash Flow
Estimates
Paid
State the accounting entries required if a business made sales on credit of $10,000, on which it must account for sales tax at the rate of 20%.
Chapter 12 Solutions
Principles of Accounting Volume 1
Ch. 12 - Which of the following is not considered a current...Ch. 12 - A company regularly purchases materials from a...Ch. 12 - The following is selected financial data from...Ch. 12 - A ski company takes out a $400,000 loan from a...Ch. 12 - Nido Co. has a standing agreement with a supplier...Ch. 12 - A client pays cash in advance for a magazine...Ch. 12 - Lime Co. incurs a $4,000 note with equal principal...Ch. 12 - Which of the following best describes a contingent...Ch. 12 - Blake Department Store sells television sets with...Ch. 12 - What accounts are used to record a contingent...
Ch. 12 - Which of the following best describes a contingent...Ch. 12 - Which of the following accounts are used when a...Ch. 12 - Which of the following is not a characteristic of...Ch. 12 - Sunlight Growers borrows $250,000 from a bank at a...Ch. 12 - Marathon Peanuts converts a $130,000 account...Ch. 12 - An employee earns $8,000 in the first pay period....Ch. 12 - Which of the following is considered an employer...Ch. 12 - Employees at Rayon Enterprises earn one day a...Ch. 12 - An employee and employer cost-share health...Ch. 12 - Why is Accounts Payable classified as a current...Ch. 12 - On which financial statement are current...Ch. 12 - What is the difference between a noncurrent...Ch. 12 - How is the sales tax rate usually determined? Does...Ch. 12 - If Bergen Air Systems takes out a $100,000 loan,...Ch. 12 - What amount is payable to a state tax board if the...Ch. 12 - What specific accounts are recognized when a...Ch. 12 - What is a contingent liability?Ch. 12 - What are the two FASB required conditions for a...Ch. 12 - If a bankruptcy is deemed likely to occur and is...Ch. 12 - Name the four contingent liability treatments.Ch. 12 - A companys sales for January are $250,000. If the...Ch. 12 - What is a key difference between a short-term note...Ch. 12 - What business circumstance could bring about a...Ch. 12 - What business circumstance could produce a...Ch. 12 - Jain Enterprises honors a short-term note payable....Ch. 12 - What are examples of involuntary deductions...Ch. 12 - What are the tax rates for FICA Social Security...Ch. 12 - What are FUTA and SUTA taxes? Is there any...Ch. 12 - Use Figure 12.15 as a reference to answer the...Ch. 12 - Campus Flights takes out a bank loan in the amount...Ch. 12 - Consider the following accounts and determine if...Ch. 12 - Lamplight Plus sells lamps to consumers. The...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Elegant Electronics sells a cellular phone on...Ch. 12 - Homeland Plus specializes in home goods and...Ch. 12 - Bhakti Games is a chain of board game stores....Ch. 12 - Following is the unadjusted trial balance for Sun...Ch. 12 - Barkers Baked Goods purchases dog treats from a...Ch. 12 - Use information from EA10. Compute the interest...Ch. 12 - Scrimiger Paints wants to upgrade its machinery...Ch. 12 - Following are payroll deductions for Mars Co....Ch. 12 - Toren Inc. employs one person to run its solar...Ch. 12 - In EA14, you prepared the journal entries for the...Ch. 12 - An employee and employer cost-share pension plan...Ch. 12 - Everglades Consultants takes out a loan in the...Ch. 12 - Match each of the following accounts with the...Ch. 12 - Pianos Unlimited sells pianos to customers. The...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Monster Drinks sells twenty-four cases of...Ch. 12 - McMasters Inc. specializes in BBQ accessories. In...Ch. 12 - Following is the unadjusted trial balance for Pens...Ch. 12 - Airplanes Unlimited purchases airplane parts from...Ch. 12 - Use information from EB9. Compute the interest...Ch. 12 - Whole Leaves wants to upgrade their equipment, and...Ch. 12 - Reference Figure 12.15 and use the following...Ch. 12 - Marc Associates employs Janet Evanovich at its...Ch. 12 - In EB13, you prepared the journal entries for...Ch. 12 - An employee and employer cost-share 401(k) plan...Ch. 12 - Consider the following situations and determine...Ch. 12 - Stork Enterprises delivers care packages for...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Machine Corp. has several pending lawsuits against...Ch. 12 - Emperor Pool Services provides pool cleaning and...Ch. 12 - Serene Company purchases fountains for its...Ch. 12 - Mohammed LLC is a growing consulting firm. The...Ch. 12 - Lemur Corp. is going to pay three employees a...Ch. 12 - Record the journal entries for each of the...Ch. 12 - Consider the following situations and determine...Ch. 12 - Perfume Depot sells two different tiers of perfume...Ch. 12 - Review the following transactions, and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Review the following transactions and prepare any...Ch. 12 - Roundhouse Tools has several potential warranty...Ch. 12 - Shoe Hut sells custom, handmade shoes. It offers a...Ch. 12 - Air Compressors Inc. purchases compressor parts...Ch. 12 - Pickles R Us is a pickle farm located in the...Ch. 12 - Use Figure 12.15 to complete the following...Ch. 12 - Use the information from PB10 to complete this...
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