Beruflich Dokumente
Kultur Dokumente
1/18/2016
CH 13 HW EX 12, 13, 14: PR 6,7,11
EX 13-12
No Doubt Co.
10 coupons for premium
purchased 8000 premiums @ .80 =
sold 110000 boxes @ 3.30 =
redeemed 44000 in 2014
extimated 60% total will be redeemed
Entries
Inventory of Premiums
Cash
$
6,400
$ 363,000
6,400
$
Cash
Sales Revenue
$ 363,000
Premium Expense
Inventory of Premiums
Premium Expense*
Premium Liability
6,400
$ 363,000
3,520
$
3,520
1,760
1,760
110000
66000
44000
22000
ACC 3220
1/18/2016
CH 13 HW EX 12, 13, 14: PR 6,7,11
EX 13-13
1) Salt-n-Pepa Inc.
Probable and likely to occur
The liability should be reported because it was in a time period before December 31, 2014,
before the statements are issued. The lawyers have determined it is probable. There is a
reasonable estimation. The lower amount should be reported and the higher amount should
be disclosed.
er 31, 2014,
mount should
14. There is a
e $500,000 will
ACC 3220
1/18/2016
CH 13 HW EX 12, 13, 14: PR 6,7,11
EX 13-14
Oil Products Co.
1-Jan-14
Purchsed Oil Tanker Depot
Est. operation 10 years
ARO cost
Present value of ARO
Eff interest rate 6%
$ 600,000
$
$
75,000
41,879
a) 2014, Jan 1
Oil Tanker Depot
Asset Retirement Obligation (ARO)
41,879
b) 2014, December 31
Depreciation Expense*
Accumulated Depreciation
Interest Expense**
Interest Payable
c) 2023, December 31
ARO
Loss on settlement ARO
Cash
41,879
4,188
2,153
80,000
4,188
$
$
2,153
75,000
5,000
* Depreciation
41879 / 10 yrs =
4,188
** Interest
41879 x 6% =
2,153
ACC 3220
1/18/2016
CH 13 HW EX 12, 13, 14: PR 6,7,11
PR 13-6
Dos Passos Co.
Sales occurred Dec 31, 2014
Sells TVsPrice
2014 Sold
Cost separate warranty
Sold warraties
$
$
900
300
90
270
$ 270,000
$
24,300
$ 294,300
Entries
a) 2014
Cash
Sales Revenue
Unearned Warranty Revenue
c) 2015
Dec 31 Unearned Warranty Revenue
Warranty Revenue
(24300 / 3) for 1 year
Dec 31
$ 294,300
$ 270,000
$
24,300
24,300
8,100
$
$
8,100
6,000
2,000
4,000
8,100
16,200
ACC 3220
1/18/2016
CH 13 HW EX 12, 13, 14: PR 6,7,11
PR 13-7
Alvarado Co.
Sells a machine
12 mth warranty
2014 sells
warranty cost
parts
$
170
labor
$
220
a) accural
1)
2)
3)
4)
2014 sale
Cash
Sales Revenue
(7400 x 600)
2014 cost
Warranty parts expense
Warranty labor expense
Cash
(170 * 600)/2
(220 * 600)/2
7,400
600
390
$
$
2014 expense
Warranty parts expense
Warranty labor expense
Warratny Liability
$
$
4,440,000
$
4,440,000
117,000
117,000
117,000
51,000
66,000
51,000
66,000
117,000
cont. PR 13-7
b) cash basis
1)
2014 sales
Cash
Sales Revenue
(7400 x 600)
2)
4,440,000
$
$
4,440,000
117,000
51,000
66,000
3)
4)
c)
accural
cash
$
$
51,000
66,000
$
117,000
d)
best method to reflect income
the accural method would be the best to reflect the correct income. It matches the revenue
to the expense in the correct year. The cash method would not.
the expenses for 2014 would be understated
and the expense for 2015 would be overstated
ACC 3220
1/18/2016
CH 13 HW EX 12, 13, 14: PR 6,7,11
PR 13-11
Polska Corp
a)
1)
uninsured accident
Uninsured accident loss
Uninsured accident liability
2)
3)
b)
1)
350000
350000
In the 60,000, the legal counsel found an unfavorable outcome was unlikely. No record.
In the 350,000 lawsuit, legal counsel found an unfavorable outcome probable. Since it
occurred before the issue of statements and a reasonable estimate of the amount of loss
the 350,000 should be recorded.
2)
Since it has been communicated that the foreign government is going to expropriate
(seize) the assets of the company, it should be noted in the financial statements. The
foreign country is offering 40% of the fair market value of the business, which is
1925000 lower than the book value. The company can show the loss whe
assets when said assets are seized.
3)
The company should not establish a liability for expected future injury to others or
damage to property of others, even if it can reasonably estimate the amoount of losses.
going to expropriate
ncial statements. The
usiness, which is
and write off the
injury to others or
e the amoount of losses.