Question 12 

pts
During 20x1, Pitchfork Company sold 196 custom copiers for $4,420 each. Pitchfork
includes a 1-year warranty with each copier sale and estimates the warranty costs to be
$301 for each copier during the warranty period. During 20x1, Pitchfork incurred actual
warranty costs of $17,380.
 
What is the estimated warranty liability Pitchfork will report at December 31, 20x1?
 
Group of answer choices

$41,616

$58,996

$17,380

$76,376
 
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Question 2 2 pts
At December 31, 20x1, Pitchfork Company reports the following balances for its liability
accounts:

7% note payable issued Oct. 1, 20x1 maturing Sept. 30, 20x2 $375,000

8% note payable issued Apr 1, 20x1, payable in 6 equal annual

$900,000
installments of $225,000 beginning April 1, 20x2

 
On December 1, 20x1, the entire $900,000 balance of the 8% note was refinanced by
issuance of a note payable to be paid in one lump sum due April 1, 20x7. In addition, on
December 10, 20x1, Pitchfork began discussions with the bank to refinance the 7% note
payable on a long-term basis. No agreement had been reached at December 31, 20x1.
 
What is the amount of the notes payable that should be recorded as a current liability on
the December 31, 20x1, Balance Sheet?
 
Group of answer choices
$375,000

$-0-

$600,000

$1,275,000
 
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Question 3 2 pts
Pitchfork Company is being sued in a class action lawsuit alleging local residents have
become ill due to toxic chemical exposure from its plant. Pitchfork’s lawyers state that it
is probable Pitchfork will lose the suit and be found liable for a judgment costing
anywhere from $1,800,000 to $9,000,000. However, the lawyers state that the most
probable cost is $5,400,000.
As a result of the above information, Pitchforks should report:
 
Group of answer choices

a contingent liability in the amount of $5,400,000 on its Balance Sheet and

disclose an additional contingency of up to $3,600,000 in the notes to the Balance
Sheet.

a contingent liability in the amount of $1,800,000 on its Balance Sheet and disclose an
additional contingency of up to $7,200,000 in the notes to the Balance Sheet.

a contingent liability in the amount of $5,400,000 on its Balance Sheet, but not disclose
any additional contingency.

a possible contingency of between $1,800,000 and $9,000,000 only in the notes to the
Balance Sheet.

Question 52 pts
Which of the following is not true about the discount on short-term notes payable?
Group of answer choices

The Discount on Notes Payable account should be reported as an asset on the

balance sheet.
The Discount on Notes Payable account has a debit balance.

When there is a discount on a note payable, the effective interest rate is higher than the
stated discount rate.

Discount on Notes Payable is a contra account to Notes Payable.

Question 82 pts
On January 1, 20x1, Pitchfork Company issued a $750,000, 6%, 5-year bond for
$690,109 and incurred debt issuance costs of $20,000. The bond pays interest annually
every December 31st. At of the date of issuance, the market rate was 8% APR.  The
adjusted market rate is 8.70%. 
What is the carrying value of the bond at December 31, 20x1, after the first interest
payment has been recorded?  The company amortizes the discount and debt issuance
costs using the effective interest method.
Group of answer choices

$683,408

$700,317

$679,900

$678,718
 
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Question 92 pts
Feller Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2020 at 97 plus
accrued interest. The bonds are dated January 1, 2020, and pay interest on June 30
and December 31. What is the total cash received on the issue date?
Group of answer choices

$19,700,000

$20,450,000

$19,400,000

$19,100,000
 
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Question 10 2 pts
On January 1, 20x1, Pitchfork Company retired $350,000 of callable bonds at 102. At
the time of redemption, the unamortized premium was $25,000. What amount should
Pitchfork record for the gain on retirement of the bond?
Group of answer choices

$18,000 Gain

$7,000 Gain

$25,000 Gain

$0 Gain