Chapter 9 - Annand, D.

(2018):
➖ Concept Self-check: 1 to 6;
1. What is the difference between a current and long-term liability?
Current liabilities are obligations due within one year or the normal operating cycle
of the business, whichever is longer. These liabilities are generally paid with current
assets.
Long-term liabilities are debts of the business that are due beyond one year or the
normal operating cycle of the business. Long-term debt is an example of a long-term
liability and may include: leases, bank notes, bonds payable, and mortgage loans.

2. What are some examples of known current liabilities?

Some examples include accounts payable, which are amounts due to vendors, short-
term bank loans, employee benefits, and accrued income taxes.

3. How are known current liabilities different from estimated current liabilities?
Known current liabilities are those where the payee, amount, and timing of payment
are known. Examples include accounts payable, unearned revenues, and payroll
liabilities. These are different from estimated current liabilities where the amount is
not known and must be estimated. Estimated current liabilities are discussed later in
this chapter.
An estimated liability is known to exist where the amount, although uncertain, can be
estimated. Two common examples of estimated liabilities are warranties and income
taxes.

4. What are some examples of estimated current liabilities?

Two common examples of estimated liabilities are warranties and income taxes.

5. How is an estimated current liability different from a contingent liability?

Current and contingent liabilities are both important financial matters for a
business. The primary difference between the two is that a current liability is an
amount that you already owe, whereas a contingent liability refers to an amount
that you could potentially owe depending on how certain events transpire.

6. What are bonds, and what rights are attached to bond certificates?

➖ Comprehensive Problem: CP9-4, CP9-5, CP9-7, CP9-8

➖ Problem: P9-1,
1. a. Entry to record receipt of loan proceeds from the bank:
Dec.31 Cash 100,000
Loan Payable 100,000

b. Entry to record purchase of the equipment:

Jan.2 Equipment 95,000
Cash 95,000

2. The loan repayment schedule is as follows:

Zinc Corp.
Loan Repayment Schedule
A B C (D-B) D E (A-C)
Year Beginning Interest Reduction Total Ending
Ended Loan Expense of Loan Loan Loan
Dec. 31 Balance Payable Payment Balance

2016 100,000 8,000 22,192 30,192 77,808

2017 77,808 6,225 23,967 30,192 53,841
2016 53,841 4,307 25,885 30,192 27,956
2019 27,956 2,236 27,956 30,192 0

3. Entry to record the last loan payment:

Dec.31 Interest Expense 2,236

Loan Payable 27,956
Cash 30,192

📌 Chapter 11 - Annand, D. (2018):

➖ Concept Self-check: 7, 8;
➖ Comprehensive Problem: CP11-1
➖ Problem: P11-5,

Chapter 11 – Warren, C.S, Reeve, J.M, & Duchac, J.E. (2018)

➖ Discussion Questions:
3,
as federal taxes, state and local income taxes, and contributions to pension plans.
7,
The vacation pay expense should be recorded during the period.

9,
To match revenues and expenses properly, the liability to cover product warranties should be
recorded in the period during which the sale of the product is recorded.

10;
The repair costs would be recorded by Dr Product Warranty Payable and Cr Cash, Supplies, or
another appropriate account.

➖ Practice Exercises:
PE 11-7B, Estimated warranty liability
a. July 31 6415/352 14,625 (4.5% × $325,000)

b. Nov. 11 352/111 220

➖ Exercises:
EX 11-1, Current liabilities
Current liabilities:
Federal income taxes payable $ 336,000 ($840,000 × 40%)
Advances on magazine subscriptions 1,593,750 (25,000 × $85 × 9/12)
Total $1,929,750

EX 11-17, Accrued vacation pay

a. 622/335 4,500 ( $54,000/12)
b. Vacation pay is reported as a current liability on the balance sheet

EX 11-20, Accrued product warranty

a. Jan 31 6415/352 15,000 (2.5% × $600,000)
b. 352 310
153 200
344 110

EX 11-21, Accrued product warranty

a. To accurately evaluate the near-term cash demands on the business, relative to the quick
current assets and other longer-term demands.

b. 6415/352 3,355,000,000
7,031+ X – $3,000 = $$7,386
X = $3,355 million

c. probable, reasonably estimable

📌 Chapter 13 – Warren, C.S, Reeve, J.M, & Duchac, J.E. (2018)

➖ Discussion Questions:
7,
a. It has no effect on revenue or expense.
b. It reduces stockholders’ equity by $3,000,000.

8;
a. It has no effect on revenue.
b. It increases stockholders’ equity by $3,750,000.

➖ Practice Exercises:
PE 13-6A, Reporting stockholders’ equity
Stockholders’ Equity
Common stock, $2 par $ 150,000
Excess of issue price over par 2,250,000 2,400,000
From sale of treasury stock 60,000
Total paid-in capital 2,460,000
Retained earnings 10,880,000
Total 13,340,000
Deduct treasury stock (5,000 shares at cost) 140,000
Total stockholders’ equity 13,200,000

➖ Exercises:
EX 13-3, Entries for issuing par stock
a.
Oct 31 Cash (400,000 shares × $18) 7,200,000
Common Stock (400,000 shares × $10) 4,000,000
 Paid-In Capital in Excess of Par— Common Stock 3,200,000
[400,000 shares × ($18 – $10)]
Nov 19 Cash (50,000 shares × $80) 4,000,000
Preferred Stock (50,000 shares × $75) 3,750,000
Paid-In Capital in Excess of Par— Preferred Stock 250,000
[50,000 shares × ($80 – $75)]

b.
7,200,000+4,000,000=11,200,000

EX 13-17, Reporting paid-in capital

Stockholders’ Equity
Paid-in capital:
Preferred 2% stock, $120 par (85,000 shares authorized, 70,000 $8,400,000
shares issued)
Excess of issue price over par 210,000 $ 8,610,000

Common stock, no par, $14 stated value (375,000 shares $4,480,000

authorized, 320,000 shares issued)
Excess of issue price over par 480,000 4,960,000
From sale of treasury stock 45,000
Total paid-in capital $13,615,000

EX 13-20, Retained earnings statement

Sumter Pumps Corporation
Retained Earnings Statement
For the year ended January 31, 20Y2
Retained earnings, February 1, 20Y1 $59,650,000
Net income 8,160,000
Less dividends declared 3,600,000
Increase in retained earnings 4,560,000
Retained earnings, January 31, 20Y2. 64,210,000

EX 13-21, Stockholders’ Equity section of balance sheet

Stockholders’ Equity
Paid-in capital:
Preferred 2% stock, $80 par (125,000 shares authorized and $10,000,000
issued)
Excess of issue price over par 500,000 $ 10,500,000
 Common stock, $20 par (1,000,000 shares authorized, 825,000 $16,500,000
shares issued)
Excess of issue price over par 1,155,000 17,655,000
Total paid-in capital $ 28,155,000
Retained earnings($96,700,000 – $300,000) 96,400,000
Total $124,555,000
Deduct treasury stock (75,000 shares at cost) 1,755,000
Total stockholders’ equity $122,800,000

$96,700,000 – $300,000. Since the organizing costs should have been expensed, the retained
earnings should be $300,000 less.

📌 Chương 7 – Bài tập kế toán tài chính (Phần 1): Bài tập 7.1, 7.2, 7.4, và 7.5.