Question 1

Buy Best Company sells personal computers for $2,300 each.The price includes a two-year warranty.During 2020,the company sells 600 computers.On the basis of past experience,the warranty costs are estimated to be $150 per computer.The actual warranty costs paid by Buy Best during 2020 were $45,000.Prepare general journal entries to record the estimated warranty expense and the warranty payments during 2020.

Accepted Answer

The answer of Buy Best Company sells personal computers for...

Question 2

A company sells its product subject to a warranty that covers the cost of parts and labour for repairs during the six months after sale.warranty costs are estimated to be 3.5% of sales for parts,and 1.5% of sales for labour.During the month of June,the company performed warranty work and used $8,000 worth of parts and paid $4,000 in wages for labour to do the warranty work.Sales for June amounted to $450,000.
(1)What account should be debited for the $4,000 in labour?
(2)What should be the amount of estimated warranty expense for June?
(3)If the Estimated Warranty Liability account had a $10,000 credit balance on May 31,what should be the account balance as of June 30?

Accepted Answer

The answer of A company sells its product subject to...

Question 3

On June 5,BB Company borrowed $120,000 from AH Bank.The loan had an interest rate of 10% and was due in 90 days.BB Company's fiscal year-end is June 30.Prepare the journal entry to record the year-end interest accrual.

Accepted Answer

The answer of On June 5,BB Company borrowed $120,000 from...

Question 4

On November 16,Ray Co.borrowed $40,000 from CRB Bank.The loan had an interest rate of 11% and was due in 90 days.Prepare the journal entry to record the payment of the note on Ray's books,assuming an adjusting entry was made at December 31st,Ray Co.'s year end.

Accepted Answer

The answer of On November 16,Ray Co.borrowed $40,000 from CRB...

Question 5

Honest Computers sells computers with a 6-month warranty.In January,the company sold 35,000 computers at $2,600 each and 1,500 computers were returned for repairs.The total repair costs amounted to $185,000.It is estimated that 3% of all units sold will need repairs under warranty at an estimated cost of $300 per unit.Prepare the journal entry to record warranty expense for January.

Accepted Answer

The answer of Honest Computers sells computers with a 6-month...

Question 6

On August 1,Droid Co.borrowed $80,000 from Simpli Financial.The loan had an interest rate of 7% and was due in 60 days.Prepare the journal entry for Droid Co.to record the note.

Accepted Answer

The answer of On August 1,Droid Co.borrowed $80,000 from Simpli...

Question 7

On July 16,Freedom Flight gave a 120-day note payable to Slick and Slide Co.,instead of cash payment of an overdue account.The amount of the note was $75,000 at an interest rate of 14%.Prepare the journal entry and determine the maturity date for Freedom Flight to record payment of the note.

Accepted Answer

The answer of On July 16,Freedom Flight gave a 120-day...

Question 8

During November 2021,Sunset Airlines sold out all of its eight flights going from Toronto to Cuba.Two flights depart in December 2021 and six flights depart in January 2022.Sunset collected $1,960,000 in November 2021 for the flights.Sunset's year end is December 31
Required: What adjusting entry would be needed to recognize revenue for 2021? Date the entry.What would be the value of the liability on Sunset's Balance Sheet at December 31,2021? State if the liability is current or non-current.

Accepted Answer

The answer of During November 2021,Sunset Airlines sold out all...

Question 9

On June 5,Scavenger Company borrowed $125,000 from BC Bank.The loan had an interest rate of 10% and was due in 90 days.Scavenger Company's fiscal year-end is December 31.Prepare the journal entry to record the payment of the note on Scavenger's books.

Accepted Answer

The answer of On June 5,Scavenger Company borrowed $125,000 from...

Question 10

Elder Helpers Ltd estimates its income taxes at 35% of pre-tax income.For the quarter ended September 30,pre-tax income was $220,000.Prepare the journal entry to record the estimated income taxes and the subsequent remittance on October 5.

Accepted Answer

The answer of Elder Helpers Ltd estimates its income taxes...

Question 11

On June 5,BB Company borrowed $120,000 from AH Bank.The loan had an interest rate of 10% and was due in 90 days.BB Company's fiscal year-end is December 31.Prepare the journal entry to record the receipt of the cash.

Accepted Answer