During 2010, Eaton Co. introduced a new product carrying a 2-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2010 and 2011 are as foll
Mott Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Mott $2.00 each. Mott estimates that 40% of the coupons will be redeemed. Data for 2010 and 2011 are as follows. 2010 2011 Bags
A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2010. Historically, 10% of customers mail in the rebate form. During 2010, 4,000,000 packages of light bulbs were sold, and $140,000 in $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, on the 2010 fina
1. On November 1, 2011, Quantum Technology, a geothermal energy supplier, borrowed $8.30 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 13% promissory note. Interest was payable at maturity. Quantum's fiscal p
Health care issues 1. Does the legislation include proven medical liability reforms? 2. Why or why not? 3. Support your position based on research.
7) When supplies ordered by a governmental unit are received at an actual price which is more than the estimated price on the purchase order, the Encumbrance Control account is: A. debited for the estimated price on the purchase order B. credited for the actual price on the purchase order C. credited for the or
C 10 - Reporting & Analyzing Liabilities 1. Does your company use short-term or long-term financing to acquire a majority of funds it needs? Please explain without going into too much detail about your company. 2. What are the advantages of using long-term debt versus short-term debt? Discuss the impact base on their ava
Advanced Taxation: Section 351, land for stock, assumed liabilities, distributive share, partnership basis
1. Devin contributes land (adjusted basis of $30,000; fair market value of $100,000) to Thompson, Inc., in exchange for all of its stock. The land is encumbered by a mortgage of $27,000 which Thompson, Inc. assumes. The transaction qualifies for non-recognition treatment under code section 351. Compute Devin's adjusted basis for
Wilde Corporation owns 30% of the outstanding stock of Bernie, Inc. Bernie recorded net income of $10M and paid dividends of $3M in 2005. For each of the following ratios, state the effect (higher, lower or no effect) that the use of the equity method would have on Wilde's financial ratios compared to the use of the cost method in 2005. Explain and discuss your answers. Gross margin. Total asset turnover. Cash flow from operations to current liabilities. Debt to equity .
Wilde Corporation owns 30% of the outstanding stock of Bernie, Inc. Bernie recorded net income of $10M and paid dividends of $3M in 2005. For each of the following ratios, state the effect (higher, lower or no effect) that the use of the equity method would have on Wilde's financial ratios compared to the use of the cost method
What are the arguments for and against requiring banks to mark all assets and liabilities to market continuously? Relate your arguments to managing credit risk and interest rate risk.
The accountant for the Linville Company forgot to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is: 1. An overstatement of assets and of net income offset by an understatement of stockholders' equity. 2. An overstatement of net income and an understatement of assets. 3. An understatement of assets, net income, and stockholders' equity. 4. An overstatement of liabilities offset by an understatement of stockholders' equity.
The accountant for the Linville Company forgot to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is: 1. An overstatement of assets and of net income offset by an understatement of stockholders' equity. 2. An overstatement of net income and an understatement of as
You were in the final stages of your audit of the financial statements of Scott Corporation for the year ended December 31, 20X0, when you were consulted by the corporation's president, who believes there is no point to your examining the 20X1 voucher register and testing data in support of 20X0 entries. He stated that (1)
See attachment for proper format. The information presented here represents selected data from the December 31, 2010, balance sheets and income statements for the year then ended for three firms. Calculate the missing amounts for each firm. Firm A Firm B Firm C Total assets, 1
Question 1 1. Sales taxes payable is a/an: a)estimated liability. b)contingent liability. c)current liability for retailers. d)business expense. Question 2 1. Phildell Phoenix is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,288. FICA tax for social secu
Gage Co. purchases land and constructs a service station and car wash for a total of $360,000. At January 2, 2010, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for $400,000 and immediately leased from the oil company by Gage. Fair value of the land at time of t
Tom Perry recently completed the first month of his landscaping business and has contacted you for help in preparing financial statements. While he understands that liabilities are the debts his business owes, he is a little confused about the difference between current and long-term liabilities. His business currently owes the
Use account titles for the transactions: Cash, Accounts Payable, Notes Payable, Interest Payable, Unearned Ticket Revenue, Ticket Revenue, Supplies Expense, Discount, and Interest Expense. Scenario 1: On April 1, 2009 Williams Company borrowed $100,000 from National Bank. The note is a 10%, nine month note. Interest accrues q
Hardin, Sutton, and Williams has operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy William's creditors, the partnership has deiced to liquidate. The
1. Digby has a leverage of 1.81 This means that: (Assume leverage is calculated as Assets/Equity) 2. On July 31st, the Baldwin Corporation's balance sheet reported: Total Assets of $87.248 million Total Common Stock of $2.540 million Cash of $4.020 million Retained Earnings of $20.016 million. What were the Baldwi
Enron is a large energy trading company that allegedly committed massive fraud. Enron's primary method of committing fraud was to record liabilities in related partnerships then known as special purpose entities that were not consolidated, or combined, with Enron's financial statements. Company executives have maintained that th
Roberto Martinez was the sole force behind In Over Our Heads, Inc, a corporation designed to run a year round community swimming pool. The enterprise was incorporated in the correct manner in January, with Martinez as the sole director and shareholder. Martinez contributed $ 100,000 of starting capital, which was just enough to
A bank has $10 billion in assets and $9 billion in liabilities. The duration of its assets is 2.2 years. The duration of its liabilities is 1.5 years. Market interest rates rise from 5% to 6%. What is the gain or loss to the bank?
What are the types of equity accounts? What is the role of equity accounts in raising capital? Under what circumstances would you not pay a dividend? Under what circumstances would you pay a dividend? What is a current liability? What is a noncurrent liability? What is the difference between the two types of liabilities? In
Financial Accounting P11-1A Prepare current liability entries, adjusting entries, and current liabilities section for Mane Company. P11--2A Journalize and post note transactions; show balance sheet presentation for Winsky Company.
Also see attached files. P11-1A Prepare current liability entries, adjusting entries, and current liabilities section. On January 1, 2008, the ledger of Mane Company contains the following liability accounts. Accounts Payable $52,000 Sales Taxes Payable 7,200 Unearned Service Revenue 16,000 During January the fol
Why do you think the Altria Group Annual report has so much discussion of contingencies? Based on your brief review of the contingencies note, are you confident that Altria Group has reported all its liabilities? Why or why not? Here is the footnote: http://thomson.mobular.net/thomson/7/2592/3076/
2-1 Total Assets - Using the following information, compute total assets Equipment: $10,000 Accounts payable: $900 Capital Stock: $1,500 Cash: $800 Loan payable: $9,000 Wages payable: $500 Accounts receivable: $1,000 Retained earnings: $3,400 Inventory: $3,500 2-2 Total Liabilities - Refer to data in 2-1. Comput
1. You and Frank are studying for an upcoming accounting exam. Frank says, Contributed capital is basically the stockholders' equity of the company. It includes things like the common stock, paid-in capital in excess of par, preferred stock, and retained earnings. Do you agree with Frank? Why or why not? Explain with examples.
Please explain how you solve this question. Thanks! The Athletic Accountant Company produces exercise equipment for accountants. Its main product, the Pencil-Pusher Push-Up Platform, is sold with a three-year warranty against defects. The company expects that 1% of the units sold will prove to be defective in the first year a
Rhaman Company had the following transactions during its first month of operations. The owner invested $10,200 cash in the business, plus some office furniture and equipment that had originally cost $3,000 but was currently worth only $1,500. Additional equipment costing $4,000 was purchased for cash. Inventory costing
Following is an excerpt from Hewlett-Packard's notes that accompanied its financial statements for the year ended October 31, 2008: Search v. HP is a consumer class action filed against HP on October 28, 2003 in Illinois state court alleging that HP has included an electrically erasable programmable read only memory (EEPROM) ch