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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Chapter 7, Problem 7.9E
Exercise 7.9
LO 5
Other accrued liabilities-warranties Kohl Co. provides warranties for many of its products. The January 1, 2016, balance of the Estimated Warrant}7 Liability account was $35,200. Based on an analysis of warrant claims during the past several years, this year’s warrant provision was established at 0.4% of sales. During 2016, the actual cost of servicing products under warranty was $15,600, and sales were $3,600,000.
Required:
- What amount of Warrant}7 Expense will appear on Kohl Co.’s income statement for the year ended December 31, 2016?
- What amount will be reported in the Estimated Warrant}7 Liability account on the December 31, 2016, balance sheet?
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Quèstion 12
Classic Sales Company offers warranties on all their electronic goods. Warranty expense is estimated at 4% of sales revenue. In 2018, the company had $602,000 of sales. In the
same year, it paid out $12,000 of warranty payments. Which of the following is the entry needed to record the estimated warranty expense?
O Warranty Expense
Estimated Warranty Payable
O Warranty Expense
Estimated Warranty Payable
O Estimated Warranty Payable
24,080
24,080
18,060
18,060
12,000
Cash
12,000
O Warranty Expense
18,060
Sales Revenue
18,060
Problem 15
On December 31, 2017, Entity Z acquired Lumangyao Corporation's P1,000,000 notes for
P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%,
payable annually. The notes mature in five years and classified as financial asset at amortized
cost. At December 31, 2019, the note is considered credit impaired. Entity Z determined that it
was probable that the issuer would pay back only P600,000 of the principal at maturity. At
December 31, 2020, because of the improvement in the credit rating of Lumangyao, Entity Z
reassessed the collectibility of the note and now expects to collect P900,000 from Lumangyao
at maturity date.
18. The required loss allowance at Dec. 31, 2019 is
Problem 15
On December 31, 2017, Entity Z acquired Lumangyao Corporation’s P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. The notes mature in five years and classified as financial asset at amortized cost. At December 31, 2019, the note is considered credit impaired. Entity Z determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. At December 31, 2020, because of the improvement in the credit rating of Lumangyao, Entity Z reassessed the collectibility of the note and now expects to collect P900,000 from Lumangyao at maturity date.
The required loss allowance at Dec. 31, 2019 is
The impairment gain to be recognized in 2020 is
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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