Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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The Chair Company provides a 120-day parts-and-labor warranty on all merchandise it sells. The Chair Company estimates the warranty expense for the current period to be $1,270. During this period, a customer returned a product that cost $953 to repair.
a. Show the effects of these transactions on the financial statements using a horizontal statements model. Use "+" for increase, "-" for decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity, investing activity, or financing activity.
b. Prepapre the journal entries to record the warranty expense for the period and payment for the actual repair costs.
The Chair Company provides a 120-day parts-and-labor warranty on all merchandise it sells. The Chair Company estimates the
warranty expense for the current period to be $1,090. During the period a customer returned a product that cost $818 to repair.
Required
a. Show the effects of these transactions on the financial statements using a horizontal statements model like the example shown
here. Use a + to indicate increase or a – for decrease. if the element is not affected, leave the cell blank. In the Cash Flow column,
indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). (Not all cells will require
entry.)
CHAIR COMPANY
Horizontal Statements Model
Balance Sheet
Income Statement
Statement of
Stockholder's
Equity
Event
Assets
Liabilities +
Revenue
Expense = Net Income
Cash Flow
Estimates
Paid
Evergreen Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred:
Feb.
28
Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note.
Mar.
31
Sold merchandise to Maddox Co. that had a fair value of $7,200, and accepted a noninterest-bearing note for which $8,000 payment is due on March 31, 2022.
Apr.
3
Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.
11
Collected the entire amount due from Carr Co.
17
A customer returned merchandise costing $3,200. Evergreen reduced the customer’s receivable balance by $5,000, the sales price of the merchandise. Sales returns are recorded by the company as they occur.
30
Transferred receivables of $50,000 to a factor without recourse. The factor…
Chapter 9 Solutions
Loose Leaf for Financial Accounting: Information for Decisions
Ch. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - What is the combined amount (in percent) of the...Ch. 9 - What is the current Medicare tax rate? This rate...Ch. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Why are warranty liabilities usually recognized on...Ch. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Prob. 15DQCh. 9 - Prob. 16DQCh. 9 - Prob. 1QSCh. 9 - Prob. 2QSCh. 9 - Ticketsales, Inc., receives $5,000,000 cash in...Ch. 9 - Prob. 4QSCh. 9 - Prob. 5QSCh. 9 - Prob. 6QSCh. 9 - Prob. 7QSCh. 9 - Prob. 8QSCh. 9 - Prob. 9QSCh. 9 - Prob. 10QSCh. 9 - Prob. 11QSCh. 9 - Prob. 12QSCh. 9 - Sera Corporation has made and recorded its...Ch. 9 - Prob. 15QSCh. 9 - Prob. 1ECh. 9 - Prepare any necessary entries at December 31 for...Ch. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Hitzu Co. sold a copier costing $4,800 with a...Ch. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 1PSACh. 9 - Prob. 2PSACh. 9 - Paloma Co. has four employees. FICA Social...Ch. 9 - Prob. 4PSACh. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSACh. 9 - Warner Co. entered into the following transaction...Ch. 9 - Prob. 2PSBCh. 9 - Fishing Guides Co. has four employees. FICA Social...Ch. 9 - On November10, 2017, Lee Co. began operations by...Ch. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSBCh. 9 - Prob. 9SPCh. 9 - Prob. 1GLPCh. 9 - Prob. 1FSACh. 9 - Prob. 2FSACh. 9 - Prob. 3FSACh. 9 - Prob. 1BTNCh. 9 - Prob. 2BTNCh. 9 - Assume that your team is in business and you must...Ch. 9 - Prob. 5BTN
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Similar questions
- Volvo Group reported the following information in a recent year for its product warranty costs along withprovisions and utilizations of warranty liabilities (amounts in millions). Beginning product warranty liabilities, January 1 . SEK 9,881Additional provisions to product warranty liabilities 7,836Utilizations and reductions of product warranty liabilities (7,134)Ending product warranty liabilities, December 31 . . . . . . . . . . . . . . . . . . . . . SEK 10,583 1. Prepare Volvo’s journal entry to record its estimated warranty liabilities (provisions) for the year. 2. Prepare Volvo’s journal entry to record its costs (utilizations) related to its warranty program for the year. Assume those costs involve replacements taken out of inventory, with no cash involved. 3. How much warranty expense does Volvo report for the year?arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 12%, 7-month note. 12% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $8,800, and accepted a noninterest-bearing note for which $10,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $8,000 with terms 2/10, n/38. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $3,900. Evergreen reduced the customer's receivable balance by $5,700, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $57,000 to a factor without recourse. The factor charged Evergreen a 1% finance charge on the…arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2024, the following transactions related to receivables occurred: February 28 Sold merchandise to Lennox, Incorporated, for $24,000 and accepted a 8%, 7-month note. 8% is an appropriate rate for this type of note. March 31 Sold merchandise to Maddox Company that had a fair value of $16,560, and accepted a noninterest-bearing note for which $18,000 payment is due on March 31, 2025. April 3 Sold merchandise to Carr Company for $12,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts. April 11 Collected the entire amount due from Carr Company April 17 A customer returned merchandise costing $4,100. Evergreen reduced the customer's receivable balance by $5,900, the sales price of the merchandise. Sales returns are recorded by the company as they occur. April 30 Transferred receivables of $59,000 to a factor without recourse. The factor…arrow_forward
- Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2024, the following transactions related to receivables occurred: February 28 Sold merchandise to Lennox, Incorporated, for $24,000 and accepted a 8%, 7-month note. 8% is an appropriate rate for this type of note. March 31 Sold merchandise to Maddox Company that had a fair value of $20, 240, and accepted a noninterest-bearing note for which S 22,000 payment is due on March 31, 2025. April 3 Sold merchandise to Carr Company for $20,000 with terms 210/, n30/. Evergreen uses the gross method to account for cash discounts. April 11 Collected the entire amount due from Carr Company April 17 A customer returned merchandise costing $4,500. Evergreen reduced the customer's receivable balance by $6,300, the sales price of the merchandise. Sales retums are recorded by the company as they occur. April 30 Transferred receivables of $63,000 to a factor without recourse. The factor…arrow_forwardThe Chair Company provides a 120-day parts - and - labor warranty on all merchandise it sells. The Chair Company estimates the warranty expense for the current period to be $2,650. During the period a customer returned a product that cost $1,830 to repair. Required: a. Show the effects of these transactions on the financial statements using a horizontal statements model. Indicate whether the event increases, decreases, or increases and decreases each element of the financial statements. In the Statement of Cash Flows column, designate the cash flows as operating activities (OA ), investing activities (IA), or financing activities (FA).arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $66,000 to a factor without recourse. The…arrow_forward
- Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $66,000 to a factor without recourse. The…arrow_forwardE. An entity sells washing machines that carry a three-year warranty against manufacturer's defects. Based on the entity's experience, warranty costs are estimated at P300 per machine. During the year, the entity sold 2,400 washing machines and paid warranty costs of P170,000. What amount should be reported as estimated warranty liability at year-end?arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $66,000 to a factor without recourse. The…arrow_forward
- Haeir Co. sells washing machines that carry a three-year warranty against manufacturer's defects. Based on the entity's experience, warranty costs are estimated at P 300 per machine. During the current year, the entity sold 2,400 washing machines and paid warranty costs of P 170,000. What amount should be reported as warranty expense for the years? What amount should be reported as warranty liability at year-end? respectively * A.P 720,000 and P 170,000 B.P 170,000 and P 720,000 C.P 240,000 and P 550,000 D.P 720,000 and P 550,000arrow_forwardCasio Co. sells calculators that carry a one- year warranty against manufacturer's defects. Based on company experience, warranty costs are estimated at P 300 per calculator. During 2019, Casio sold 24,000 calculators and paid warranty costs of P 170,000. In its income statement for the year ended Dec. 31, 2019, how much should Casio report as warranty expense? * A.P 5,500,000 B.P 2,400,000 C.P 1,700,000 D.P 7,200,000arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $7,520, and accepted a noninterest-bearing note for which $8,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $5,500 with terms 3/10, n/30. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $3,700. Evergreen reduced the customer’s receivable balance by $5,500, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $55,000 to a factor without recourse. The…arrow_forward
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