Question

In: Accounting

1. On 1/1/24, Traverse Company sold 100 components at $700 each. All sales were cash sales....

1.

On 1/1/24, Traverse Company sold 100 components at $700 each. All sales were cash sales. Estimated total cost servicing the components was $1,100 each year of the five-year warranty. Traverse spent $1,500 servicing the components in 2024 and $500 servicing components in 2025.

This is considered an "assurance-type" warranty; Traverse uses the Expense Warranty approach. What is the 2025 Warranty Expense?

Select one:

a. $0

b. $4,000

c. $1,500

d. $5,500

e. $4,900

2.

On August 1, 2022, Burdick Co. issued bonds with a face value of $600,000. The bonds carry a stated interest rate of 8%; interest is payable each June 1st and December 1st. The bonds were issued at 102 plus accrued interest. The straight-line method is used. The bonds mature on 6/1/25.

What was the total cash received on 8/1/22?

Select one:

a. $622,000

b. $614,000

c. $620,000

d. $638,000

e. $618,000

3.

On January 1, 2024, Bear Cove Co. issued its 11% bonds in the face amount of $3,000, which mature on January 1, 2034. The bonds were issued for $3,385 to yield 9%. Bear Cove uses the effective-interest method of amortizing the bond premium. Interest is payable annually on December 31.

The 2024 Interest Expense is approximately:

Select one:

a. $341

b. $300

c. $272

d. $305

Solutions

Expert Solution

1)Correct option is "A"-0

Since all of the warranty expense was recognized on estimated basis in the year of sale ,so when such expense are paid estimated warranty liability is debited and cash is credited thus no accounting for warranty expenses are done in future years.

2)Correct option is "C" -620000

Issue Price =Face value * Issue price /100

               = 600000 *102 /100

               = 612000

Accrued interest for the period (1June -1Aug ) at the time of issuance =Face value *stated rate *n/12

                                     = 600000*.08*2/12

                                     = 8000

Cash received = 612000+8000= 620000

3)Correct option is "D" -305

Interest expense for year 2024 =carrying value of bond *yield

                    = 3385 * 9%

                    = 304.65 (rounded to 305)

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Classifying Cash Flows The company provided the following information. (a)   Cash sales for the year were...
Classifying Cash Flows The company provided the following information. (a)   Cash sales for the year were $50,000; sales on account totaled $60,000. (b) Cost of goods sold was $55,000. (c)   All inventory is purchased on account. (d) Depreciation on building was $31,000 for the year. (e)   Depreciation on equipment was $2,000. (f)   Cash collections of accounts receivable were $38,000. (g) Cash payments on accounts payable for inventory equaled $39,000. (h)   Rent expense paid in cash was $11,000. (i)   20,000 shares...
On January 1, Easton Company had cash on hand of $100,000. All of January's $208,000 sales...
On January 1, Easton Company had cash on hand of $100,000. All of January's $208,000 sales were on account. December sales of $206,000 were also all on account. Experience has shown that Easton typically collects 30% of receivables in the month of the sale and the balance the following month. All materials and supplies are purchased on account and Easton has a history of paying for half of these purchases in the month of purchase and half the following month....
On January 1, Easton Company had cash on hand of $100,000. All of January's $208,000 sales...
On January 1, Easton Company had cash on hand of $100,000. All of January's $208,000 sales were on account. December sales of $206,000 were also all on account. Experience has shown that Easton typically collects 30% of receivables in the month of the sale and the balance the following month. All materials and supplies are purchased on account and Easton has a history of paying for half of these purchases in the month of purchase and half the following month....
Consider each of the transactions below. All of the expenditures were made in cash. The Edison...
Consider each of the transactions below. All of the expenditures were made in cash. The Edison Company spent $23,000 during the year for experimental purposes in connection with the development of a new product. In April, the Marshall Company lost a patent infringement suit and paid the plaintiff $7,500. In March, the Cleanway Laundromat bought equipment. Cleanway paid $17,000 down and signed a noninterest-bearing note requiring the payment of $23,500 in nine months. The cash price for this equipment was...
On June 24, 20Y9, a building was sold for $225,000 cash. The building was originally purchased...
On June 24, 20Y9, a building was sold for $225,000 cash. The building was originally purchased in 20Y1 for $210,000. To date, it had accumulated depreciation of $20,000. Which of the following is true on the date of disposition? A.A gain on sale of $35,000 should be recorded. B.The building had a net book value of $205,000. C.The building had a fair market value of $190,000. D.The building had a net book value of $225,000
Transaction 5 Sales were $72,000. Cost of merchandise sold was 75% of sales. 40% of sales...
Transaction 5 Sales were $72,000. Cost of merchandise sold was 75% of sales. 40% of sales were for cash. [Note: Record the complete entry for the sales first and the complete entry for the expenses second] Account: Dollar amount:    Account: Dollar amount:    Account: Dollar amount:    Account: Dollar amount:    Account: Dollar amount:    Account: Dollar amount:
3. Compute the cash cycle and each of its components for ATC in 2019. ATC Company...
3. Compute the cash cycle and each of its components for ATC in 2019. ATC Company Balance Sheet on December31 ($ millions) 2018 2019 Inventory 20 28 Accounts Receivable 36 26 Other 29 36 Cash 410 473 Total Current Assets 495 562 NPPE 1,847 2,237 Other Fixed Assets 156 212 Total Fixed Assets 2,003 2,449 Total Assets 2,499 3,011 Short Term Debt and Notes 152 173 Accounts Payable 27 28 Other 334 412 Total Current Liabilities 514 613 Long Term...
Initiating a cash discount   Gardner Company currently makes all sales on credit and offers no cash...
Initiating a cash discount   Gardner Company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 33​% cash discount for payment within 15 days. The​ firm's current average collection period is 60 days, sales are 40,000 ​units, selling price is $47 per​ unit, and variable cost per unit is $31. The firm expects that the change in credit terms will result in an increase in sales to 43,000 ​units, that 70​% of the...
The following information is available about the company: a. All sales during the year were on...
The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were:   Accounts receivable $ 350,000   Inventory $ 460,000     Total assets $ 2,560,000  ...
The following information is available about the company: a. All sales during the year were on...
The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were:   Accounts receivable $ 140,000   Inventory $ 260,000     Total assets $ 1,160,000  ...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT