P. 1
ACC422 / ACC 422 / Week 5 Individual Assignments from the Text

ACC422 / ACC 422 / Week 5 Individual Assignments from the Text

|Views: 435|Likes:
Published by Number1Tutor
week 5 individual

Assignments from the Text

a. Prepare solutions to the following




exercises

from the text:

Chapter 13: E13-1, E13-7, E13-11, E13-13

b. Prepare a response to the following




Question

from the text:
week 5 individual

Assignments from the Text

a. Prepare solutions to the following




exercises

from the text:

Chapter 13: E13-1, E13-7, E13-11, E13-13

b. Prepare a response to the following




Question

from the text:

More info:

Published by: Number1Tutor on Jul 13, 2011
Copyright:Traditional Copyright: All rights reserved
List Price: $4.99 Buy Now

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
See more
See less

10/08/2013

$4.99

USD

pdf

text

original

E13-1

(Balance Sheet Classification of Various Liabilities) How would each of the following items be reported a. Accrued vacation pay. b. Estimated taxes payable. c. Service warranties on appliance sales. d. Bank overdraft. e. Employee payroll deductions unremitted. f. Unpaid bonus to officers. g. Deposit received from customer to guarantee performance of a contract. h. Sales taxes payable. i. Gift certificates sold to customers but not yet redeemed. j. Premium offers outstanding. k. Discount on notes payable. l. Personal injury claim pending. m. Current maturities of long-term debts to be paid from current assets. n. Cash dividends declared but unpaid. o. Dividends in arrears on preferred stock. p. Loans from officers. existing debt can interchanged with "current liability"

Existing Debt Existing Debt Existing Debt or Long-Term Existing Debt Existing Debt Existing Debt Existing Debt or Long-Term Existing Debt Existing Debt Existing Debt Existing Debt or Long-Term Footnote Disclosure Existing Debt Existing Debt Footnote Disclosure Existing Debt or Long-Term

e following items be reported on the balance sheet? Existing Debt Existing Debt Existing Debt or Long-Term Debt (depending on guarantee terms) Existing Debt Existing Debt Existing Debt Existing Debt or Long-Term Debt (depending on involved time) Existing Debt Existing Debt Existing Debt Existing Debt or Long-Term Debt (depending on as deduction from face value of note) Footnote Disclosure Existing Debt Existing Debt Footnote Disclosure Existing Debt or Long-Term Debt (but different from other debts) .

E13-7 (Adjusting Entry for Sales Tax) During the month of June.700 / 1.$220.06 = $220. Rowling Boutique had cash sales of $233.200 + $8.900 .700 = $21.200 sales tax $153.000 = $8.000 cash sales … $233.06 = $145.$145.200 a Instructions Prepare the adjusting entry that should be recorded to fairly present the June 30 financial statements. $233.000 credit sales … $153.900 sales tax Jun 30 Sales Sales Tax Due 21.000 = $13.200 .900 21.700 .700 sales tax $13.200 / 1.

700. both of which include the 6% sales tax that must be remitte 30 financial statements.200 and credit sales of $153. .had cash sales of $233.

sales tax that must be remitted to the state by July 15. .

000 100. Prepare 2007 entries for Crow using the expense warranty approach.000 2.850.000 3.000.000 150.000 for 2 years.000 20.000 20.000.000 100.000 b. Prepare 2007 entries for Crow assuming that the warranties are not an integral part of the sale.E13-11 (Warranties) Sheryl Crow Equipment Company sold 500 Rollomatics during 2007 at $6.000 servicing the 2-year warranties that accompany the Rollomatic.000 25.000.000 3.000 . Assume Crow estimates the total cost of servicing the warranties will be $120. All appl Instructions a.000 each.000 25. Crow spent $20.000 3. During 2007. Assume that Crow estimates the Cash Sales Guarantee Expenditure Cash Approxi Debt Under Guaranties Cash 20. Estimate revenue Cash Sales Unearned Guaranty Income Guaranty Expenditure Cash Unearned Guaranty Income Guaranty Income 20.

. pany the Rollomatic. egral part of the sale.000 relates to sales of warranty contracts. Estimate revenues earned on the basis of costs incurred and estimated costs. $150.000 each. for 2 years.2007 at $6. All applicable transactions are on a cash basis.000 for 2 years. ume that Crow estimates the total cost of servicing the warranties will be $120. Assume that of the sales total.

nty contracts. .

had a manufacturing plant in Bosnia.000 is the sum of the insurance policy's deductible Jackson will need to pay to get the policy's benef 3. It is not certain who will compensate Etheridge for this destruction.000 has a deductible clause of $500. became involved in a tax dispute with the IRS. How should Alan Jackson Chemical report this information in its financial statements at December 31. if governmental guarantee can be regarded a high possibility of realizing the gain. Melissa Etheridge Inc. 2007 si $500.000. This must be reported with a sum of $500. if any. should be reported as a liability for this contingency as of December 31.? Since gain contingencies usually aren't to be reported. Salt-n-Pepa's attorneys h They also believe that Salt-n-Pepa will have to pay the IRS between $900. Answer the question at the end of ea 1.000. During 2007.000. when some amount in the range shows up at 2. 2007? Instructor Answer: The FASB pronouncements require that. in that case I would Therefore to put it differently. But.E13-13 (Contingencies) Presented below are three independent situations. but Etheridge has been assured by The amount of the compensation will be less than the fair value of the plant.400. it must not be reported.000 in the organization's fiscal reports at December 31. I won't report this. After th What amount. Alan Jackson Chemical was identified as a potentially responsible party by the En Jackson's management along with its counsel have concluded that it is probable that Jackson will be re Jackson's insurance policy of $9. On October 1. which was destroyed in the civil war. . but more than its book val How should the contingency be reported in the financial statements of Etheridge Inc. but quite possibly noted.000 and $1. 2007. Salt-n-Pepa Inc.

S.? the gain. in that case I would reveal it in the notes. statements at December 31. the case was settled with the IRS for $1. 2007 since it is possible that Jackson will be accountable for damages. stroyed in the civil war. as of December 31.200.400.000. that amo responsible party by the Environmental Protection Agency. 2007? orts at December 31. nt.000.000 and $1. 2007? unt in the range shows up at the time to be a better estimation compared to any other amount in the range. pay to get the policy's benefits.000. . that will cover the reasonably aapproximated damages.the question at the end of each situation. and a reasonable estimate of these damages is $5. but more than its book value. After the 2007 financial statements were issued. eridge has been assured by governmental officials that it will receive a definite amount for this plant. . Salt-n-Pepa's attorneys have indicated that they believe it is probable that Salt-n-Pepa will lose this dispute. eridge Inc. obable that Jackson will be responsible for damages.

000. .000.pa will lose this dispute. that amount is accrued.200.000. mount in the range. for this plant. When no amount in the range is a better estimation compred to any oth e damages is $5. tled with the IRS for $1.

timation compred to any other amount. the amount of money at the low end of the range is accrued and the amount .

e is accrued and the amount of money of the high end of the range is revealed. In this instance. consequently. Salt-N .

000 at December 31. would report a debt of $900. 2004. . consequently.nstance. Salt-N-Pepa Inc.

lower reduced saved income. A rise in the sum of reported liability (both short-term and long-term). it appears if accounting for the lease as an operating lease. managers debate against capitalization for many reasons: Capitalization can more easily result in breach of loan covenants. the 1st year c Or in simple terms. 2. Capital Lease Method Operating Lease Method In the illustration from the book. the organization is in the same position in either case. A reduced income earlier in the life of the lease and. capitalization can decrease rates of returns and enhance debt to equity relationships. consequently. Therfore. 3. the business community avoids capital leases. under the capital lease technique. making .Q21-3 Identify the two recognized lease accounting methods for lessees and distinguish between them. From the cash flow perspective. many organizations think that capital leases badly infdluence their budget: Their debt to total eq Cosequently. A rise in the sum of total assets (particularly long-lived assets). However. the following differences happen if using a capital lease rather than an operating lease: 1. It can also influence the sum of compensation recevied by proprietors. the costs are higher in the earlier years and lower in Additionally. Eventually.

and their rate of return on total assets reduces. equity relationships.uish between them. the earlier years and lower in the later years. making the organization less appealing to existing and possible shareholders. perating lease. the 1st year charge to operations is lower than treating the dal like a capital lease. . an an operating lease: educed saved income. budget: Their debt to total equity ratio rises.

.areholders.

You're Reading a Free Preview

Download
scribd