Recent Question

Postretirement benefits consist of payments by employers 1. In a finance lease, the amount capitalized is the a. sum of the lease payments over the life of the lease. b. fair value of the leased asset on the date the lease is signed. c. present value of the lease payments. d. future value of the asset as of the lease termination date. 2. Postretirement benefits consist of payments by employers to retired employees for ...

Other / Other 26 Mar 2016

The journal entry to record the estimated warranty expense for the year Sandra Sikes sells exercise machines for home use. The machines carry a 2-year warranty. Past experience indicates that 5% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is $30 for labor and $50 for parts per unit. During 2011, 5,000 exercise machines were sold at an average price of $800. During the ...

Other / Other 26 Mar 2016

Disclosure of a contingent liability 1. Warranty expenses are reported on the income statement as a. administrative expenses. b. part of cost of goods sold. c. contra-revenues. d. selling expenses. 2. Marin Company sells 4,000 units of its product in 2011 for $500 each. The selling price includes a one-year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $50 per ...

Other / Other 26 Mar 2016

A provision is a liability of uncertain timing or amount TRUE-FALSE STATEMENTS 1. Contingent liabilities should be recorded in the accounts if there is a remote possibility that the contingency will actually occur. 2. A provision is a liability of uncertain timing or amount. 3. In concept, estimating Warranty Expense when products are sold with a warranty is similar to estimating Bad Debts Expense based on credit sales 4. Repair ...

Other / Other 26 Mar 2016

The cash paid by the employer to the pension plan MATCHING Match the items below by entering the appropriate code letter in the space provided. A. Finance lease D. Provision B. Contingent liability E. Defined-contribution plan C. Operating lease ____ 1. A contractual arrangement that gives the lessee temporary use of property. ____ 2. The cash paid by the employer to the pension plan is defined. ____ 3. A contractual a ...

Other / Other 26 Mar 2016

A lease where the intent is temporary use of the property 1. A lease where the intent is temporary use of the property by the lessee with continued ownership of the property by the lessor is called a. off-balance sheet financing. b. an operating lease. c. a finance lease. d. a purchase of property. 2. Which of the following is not a condition which would require the recording of a lease contract as a finance lease? a. ...

Other / Other 26 Mar 2016

Hewitt Car Rental leased a car to Ryan Corporation Ryan Corporation entered into the following transactions: 1. Hewitt Car Rental leased a car to Ryan Corporation for one year. Terms of the operating lease call for monthly payments of $750. 2. On January 1, 2011, Ryan Corporation entered into an agreement to lease 20 machines from Meeks Corporation. The terms of the lease agreement require an initial payment of $175,000 and then thre ...

Other / Other 26 Mar 2016

Postretirement benefits are accounted for on a cash basis TRUE-FALSE STATEMENTS 1. An operating lease transfers substantially all the benefits and risks of ownership to the lessee. 2. A finance lease requires the lessee to record the lease as a purchase of an asset. 3. When vacation benefits are paid, Vacation Benefits Expense is debited. 4. Postretirement benefits are accounted for on a cash basis. 5. In a defined-contribution plan ...

Other / Other 26 Mar 2016

Roberts Company is preparing monthly adjusting entries Roberts Company is preparing monthly adjusting entries at December 31. An analysis reveals the following: 1. During December, Roberts Company sold 4,000 units of a product that carries a 60-day warranty. The sales for this product totaled $100,000. The company expects 4% of the units to need repair under the warranty and it estimates that the average repair cost per unit will be $15. ...

Other / Other 26 Mar 2016

A company will incur product repair costs in the future A company will incur product repair costs in the future if products that it sells currently under warranty are brought in for repair during the warranty period. The company will also incur bad debts expense in the future if customers who buy on credit currently are unable to pay their accounts. Are the accounting procedures for these two contingent costs (warranty expense and bad debts ...

Other / Other 26 Mar 2016