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Concept introduction:
Liabilities:
Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.
A
A contingent liability is recognized as a liability when it is probable and its reasonable amount can estimate. For example: Amount to be paid the company knows it has lost the case
To choose:
The correct option about warranty expense.
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Chapter 8 Solutions
Cornerstones of Financial Accounting - With CengageNow
- Jamison Enterprises plans to generate $720,000 of sales revenue if a capital project is implemented. Assuming a 25% tax rate, the sales revenue should be reflected in the analysis by: problem related to Accounting 21arrow_forwardIf you give me wrong answer this financial accounting question I will give you unhelpful ratearrow_forwardPROBLEM 1: Individuals with No Existing Business Form a Partnership On February 1, 2025, Froilan Labausa contributed land, inventory, and P280,000 cash to a partnership. The land has a book value of P650,000 and a market value of P1,350,000. The inventory has a book value of P600,000 and a market value of P510,000. The partnership also assumed a P350,000 note payable owed by Labausa that was used to purchase the land. Rosalie Balhag agreed to put up cash equivalent to Labausa's net investment. Required: 1. Prepare the journal entry to record Labausa's and Balhag's investment in the partnership. 2. Prepare the statement of financial position (balance sheet) of the partnership as of February 1, 2025. PROBLEM 2: A Sole Proprietor and an Individual with No Business Form a Partnership Espanol operated a specialty shop that sold fishing equipment and accessories. Her post-closing trial balance on Dec. 31, 2024 is as follows: Cash Fish Post-Closing Trial Balance December 31, 2024 Accounts…arrow_forward
- Repsola is a drilling company that operates an offshore Oilfield in Feeland. Five yearsago, Feeland had a major oil discovery and granted licenses to drill oil to reputable,experienced drilling companies. The licensing agreement requires the company toremove the oil rig at the end of production and restore the seabed. Ninety percent ofthe eventual costs of undertaking the work relate to the removal of the oil rig andrestoration of damage caused by building it and ten percent arise through theextraction of the oil. At the Statement of Financial Position (SOFP) date (December 312025), the rig has been constructed but no oil has been extractedOn January 1st 2023, Repsola obtained the license to construct an oil rig at a cost of$500 million. Two years later the oil rig was completed. The rig is expected to beremoved in 20 years from the date of acquisition. The estimated eventual cost is 100million. The company’s cost of capital is 10% and its year end is December 31st. Repsolauses…arrow_forwardRepsola is a drilling company that operates an offshore Oilfield in Feeland. Five yearsago, Feeland had a major oil discovery and granted licenses to drill oil to reputable,experienced drilling companies. The licensing agreement requires the company toremove the oil rig at the end of production and restore the seabed. Ninety percent ofthe eventual costs of undertaking the work relate to the removal of the oil rig andrestoration of damage caused by building it and ten percent arise through theextraction of the oil. At the Statement of Financial Position (SOFP) date (December 312025), the rig has been constructed but no oil has been extractedOn January 1st 2023, Repsola obtained the license to construct an oil rig at a cost of$500 million. Two years later the oil rig was completed. The rig is expected to beremoved in 20 years from the date of acquisition. The estimated eventual cost is 100million. The company’s cost of capital is 10% and its year end is December 31st. Repsolauses…arrow_forwardMaharaj Garage & Car Supplies sells a variety of automobile cleaning gadgets including a variety of hand vacuums. The business began the first quarter (January to March) of 2024 with 20 (Mash up Dirt) deep clean, cordless vacuums at a total cost of $126,800. During the quarter, the business completed the following transactions relating to the "Mash up Dirt" brand. January 8 January 31 February 4 February 10 February 28 March 4 March 10 March 31 March 31 105 vacuums were purchased at a cost of $6,022 each. In addition, the business paid a freight charge of $518 cash on each vacuum to have the inventory shipped from the point of purchase to their warehouse. The sales for January were 85 vacuums which yielded total sales revenue of $768,400. (25 of these units were sold on account to Mandys Cleaning Supplies, a longstanding customer) A new batch of 65 vacuums was purchased at a total cost of $449,800 8 of the vacuums purchased on February 4 were returned to the supplier, as they were…arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
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