Question 1

At the beginning of 2013, MacKenzie, Inc. had a balance in the Warranty Payable account of $5,600. During the year MacKenzie sold for $250,000 several products that carried a two-year warranty. MacKenzie estimated that warranty expense would be 6% of sales for the year.
a) Prepare MacKenzie's year-end adjusting journal entry for warranty expense.
b) If MacKenzie's incurred actual warranty cost is $11,500 during 2013, what is the balance in the Warranties Payable account after the adjusting entry is made?

Accepted Answer

The answer of At the beginning of 2013, MacKenzie, Inc....

Question 2

Blankenship Company estimated that its warranty expense would be $4,250 for the current year. During the year Blankenship paid $920 to repair merchandise that was returned by customers.
a) What is the amount of warranty expense for the current year?
b) If this is the first year of operations, what is the amount of warranty liability that will be shown on the balance sheet at the end of the year?

Accepted Answer

The answer of Blankenship Company estimated that its warranty expense...

Question 3

Francisco Company began 2013 with a balance of $320 in Sales Tax payable. During the year, the company recorded taxable sales of $82,500. The ending balance in Sales Tax payable was $345 Francisco's sales tax rate is 5%.
a) How much sales tax did Francisco collect during 2013?
b) How much sales tax did Francisco pay during 2013?

Accepted Answer

The answer of Francisco Company began 2013 with a balance...

Question 4

Belize Company borrowed $25,000 from First National Bank on July 1, 2013. The note carried a 5% interest rate with a one-year term to maturity.
Required:
1) Show the effects of borrowing the money and the December 31, 2013 adjustment on the accounting equation.
2) What is the amount of interest expense for 2013?
3) Prepare a statement of cash flows for the Belize Company for 2013.

Accepted Answer

The answer of Belize Company borrowed $25,000 from First National...

Question 5

Wayne Company received proceeds of $145,920 from discounting a $152,000, one year, discount note at Gotham Bank.
a) What discount rate did the bank use?
b) Prepare the journal entry to record the proceeds of the loan.

Accepted Answer

The answer of Wayne Company received proceeds of $145,920 from...

Question 6

The trial balance of Madison Company at December 31, 2013 is as follows:  Required:
Use the trial balance of Madison Company to prepare the current assets and current liabilities sections of Madison's balance sheet at December 31, 2013. Calculate the current ratio at December 31, 2013. Show all calculations and round the ratio to two decimal places.

Accepted Answer

The answer of The trial balance of Madison Company at...

Question 7

The following transactions apply to Baker Corporation.
1) Issued common stock for $20,000 cash.
2) Provided services to customers for $16,000 on account.
3) Borrowed $15,000 on September 1 at 8% interest with a one year term.
4) Purchased land for $16,000 cash.
5) Paid $11,000 for operating expenses.
6) Collected $14,000 cash from customers.
7) Recorded interest on the note payable at year end.
8) Paid $2,000 dividends to stockholders.
Required:
a) Identify the effect on the statement of cash flows for each of the above transactions.
b) Classify the above accounting events into one of four types of transactions (asset source, asset use, asset exchange, claims exchange).

Accepted Answer

The answer of The following transactions apply to Baker Corporation.
1)...

Question 8

The following is a list of balance sheet accounts (in random order) and balances for the National Supply Company. They have been updated as of December 31, 2013.  Required:
Prepare a classified balance sheet for National Supply Company at December 31, 2013.

Accepted Answer

The answer of The following is a list of balance...

Question 9

On October 1, 2013, Tangier Company borrowed $44,000 from the bank by issuing a one year 8% interest bearing note.
Required:
a) Prepare the journal entry to record the issuance of the note.
b) Compute the amount of interest expense that will be shown on the 2013 income statement.
c) What is the total amount of cash that will be paid to the bank at the maturity of the note on October 1, 2014?
d) Prepare the liabilities section of the balance sheet at December 31, 2013.

Accepted Answer

The answer of On October 1, 2013, Tangier Company borrowed...

Question 10

On August 1, 2012, Lincoln & Co. borrowed money from the bank by issuing a one year, $12,000 face value discount note. The note carried a 6% discount rate.
Required:
a) Prepare the journal entry to record the issuance of the note.
b) Compute the amount of interest expense that will be shown on the 2012 income statement and prepare the appropriate journal entry.
c) What is the total amount of cash that will be paid to the bank at the maturity of the note on August 1, 2013? Prepare all necessary journal entries on August 1, 2013 (assume the note was paid in full).
d) Prepare the liabilities section of the balance sheet at December 31, 2012.

Accepted Answer

The answer of On August 1, 2012, Lincoln & Co....

Quiz 9: Accounting for Current Liabilities and Payroll

Wayne Company received proceeds of $145,920 from discounting a $152,000, one year, discount note at Gotham Bank. a) What discount rate did the bank use? b) Prepare the journal entry to record the proceeds of the loan.

The following is a list of balance sheet accounts (in random order) and balances for the National Supply Company. They have been updated as of December 31, 2013. Required: Prepare a classified balance sheet for National Supply Company at December 31, 2013.