Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 7, Problem 7.26P
Problem 7.26
LO 3
Unearned revenues-subscription fees Evans Ltd. publishes a monthly newsletter for retail marketing managers and requires its subscribers to pay $90 in advance for a one-year subscription. During the month of August 2016, Evans Ltd. sold 400 one-year subscriptions and received payments in advance from all new subscribers. Only 240 of the new subscribers paid their fees in time to receive the August newsletter; the other subscriptions began with the September newsletter.
Required:
- Use the horizontal model (or write the
journal entries ) to record the effects of the following items: - Subscription fees received in advance during August 2016.
- Subscription revenue earned during August 2016.
- Calculate the amount of subscription revenue earned by Evans Ltd. during the year ended December 31, 2016, for these 400 subscriptions. Optional continuation of Problem 7.26-lifetime subscription offer (Note: This is an analytical assignment involving the use of present value tables and accounting estimates. Only the first sentence in Problem 7.26 applies to this continuation of the problem.) Evans Ltd. is now considering the possibility of offering a lifetime membership option to its subscribers. Under this proposal, subscribers could receive the monthly newsletter throughout their lives by paying a flat fee of $1,200. The one-year subscription rate of $90 would continue to apply to new and existing subscribers who choose to subscribe on an annual basis. Assume that the average age of Evans Ltd.’s current subscribers is 38 and their average life expectancy is 78 years. Evans Ltd.’s average interest rate on long-term debt is 10%.
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Question 35
Swifty Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 81000 subscriptions in January at $15 each. What entry is made in January to record the sale of the subscriptions?
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Question 36
On January 1, 2018, Marigold Corporation issued $4200000, 10-year, 9% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2018 is
Cash
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Bonds Payable
4200000
Cash
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Chapter 10 Discussion
Sales tax: Remember that the customer is charged the sales tax and the company is responsible for sending the sales tax dollars to the appropriate government entity.
The company has sales of $3,500 in cash and $4,400 on account. The sales tax rate is 6%. Make the journal entry to record the sales and sales tax
Installment notes: Remember that the monthly payment stays the same, but the amount of that payment that is interest continues to go down and the payment of the principal continues to go up.
Assume that on January 1, the company borrows $50,000 from Chase Bank for 4 years at 5% interest. The installment payment is $1,200 every month. Calculate the interest amount and principal amount for the first and second months
Problem 29
Cabanes Factors provides financing to other companies by purchasing their accounts receivable on a non-recourse basis. Cabanes charges a commission to its clients of 15% of all receivables factored. In addition, Cabanes withholds 10% of receivables factored for protection against sales returns or adjustments. Cabanes credits the 10% withheld to Client Retainer and makes payments to clients at the end of each month so that the balance in the retainer is equal to 10% of unpaid receivables at the end of the month. Cabanes recognizes its 15% commissions as revenue at the time the receivables are factored. Also, experience has led Cabanes to establish allowance for bad debts of 4% of all receivables purchased. On January 2, 2021, Cabanes purchased receivables from Cabana Company totaling P3,000,000. Cabana has previously established an allowance for bad debts for these receivables of P100,000. By January 31, Cabanes had collected P2,500,000 on these receivables.…
Chapter 7 Solutions
Accounting: What the Numbers Mean
Ch. 7 - Prob. 7.1MECh. 7 - Mini-Exercise 7.2 LO 4 Other accrued...Ch. 7 - Mini-Exercise 7.3 LO 5 Other accrued...Ch. 7 - Prob. 7.4MECh. 7 - Exercise 7.5 LO 2 Notes payable-discount basis On...Ch. 7 - Prob. 7.6ECh. 7 - Exercise 7.7 LO 4 Other accrued...Ch. 7 - Exercise 7.8 LO 5 Other accrued liabilities-real...Ch. 7 - Exercise 7.9 LO 5 Other accrued...Ch. 7 - Exercise 7.10 LO 5 Other accrued...
Ch. 7 - Exercise 7.11 LO 3 Unearned revenues-customer...Ch. 7 - Exercise 7.12 LO 3 Unearned revenues-ticket sales...Ch. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Exercise 7.21 LO 4. 5, 8 Transaction...Ch. 7 - Prob. 7.22ECh. 7 - Prob. 7.23ECh. 7 - Prob. 7.24ECh. 7 - Prob. 7.25PCh. 7 - Problem 7.26 LO 3 Unearned revenues-subscription...Ch. 7 - Prob. 7.27PCh. 7 - Prob. 7.28PCh. 7 - Prob. 7.29PCh. 7 - Prob. 7.30PCh. 7 - Prob. 7.31PCh. 7 - Prob. 7.32PCh. 7 - Prob. 7.33CCh. 7 - Prob. 7.34CCh. 7 - Prob. 7.35C
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