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AlexFokin [52]
3 years ago
6

During Year 1, Fox Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs relat

ed to dollar sales are 2% within 12 months following the sale and 4% in the second 12 months following the sale. Sales and actual warranty expenditures for the years ended December 31, Year 1 and Year 2, are as follows: Actual Sales - Warranty Expenditures Year 1 - $ 150,000 - $ 2,250 Year 2 - 250,000 - 7,500 $ 400,000 - $ 9,750 What amount should Fox report as estimated warranty liability in its December 31, Year 2, balance sheet?a. $ 2,500
b. $ 4,250
c. $11,250
d. $14,250
Business
1 answer:
Olin [163]3 years ago
6 0

Answer:

D) $14,250

Explanation:

In order to determine the total warranty liability that Fox must report in its December 31, 2014, balance sheet, we must multiply the total sales for both 2013 and 2014 by the estimated warranty expenses and then subtract the incurred warranty expenses:

  • total sales during 2013 and 2014 = $150,000 + $250,000 = $400,000
  • estimated warranty expenses = 2% + 4% = 6%
  • incurred warranty expenses = $2,250 + $7,500 = $9,750

warranty liability = ($400,000 x 6%) - $9,750 = $24,000 - $9,750 = $14,250

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The adjusted trial balance of Warbocks Corporation at December 31, 2017 includes the following accounts: Retained Earnings $12,6
irina [24]

Answer:

                                            Warbocks Corporation

Statement of retained earnings for the year ended December 31, 2017

                                                                                      Amount in $

Opening retained earnings                                           12,600

Net income for the year                                                  7,000

Dividend                                                                         <u> (5,000)</u>

Closing retained earnings                                             <u> 14,600</u>

Explanation:

The retained earnings statement shows the movement in the retained earnings balance between the start and end of the year.

This includes the net earnings and dividend paid during the year.

Net income =  $30,000 - $15,000 - $2,000 - $4,500 - $500 - $1,000

= $7,000

5 0
3 years ago
The cost of perpetual preferred stock is found as the preferred's annual dividend divided by the market price of the preferred s
VikaD [51]
Answer: A


Preferred share dividends are distributions of profits and not interest payments. Thus not tax-deductible.
5 0
3 years ago
Bramble Corporation factors $252,500 of accounts receivable with Kathleen Battle Financing, Inc. on a with recourse basis. Kathl
attashe74 [19]

Answer:

Explanation:

Before passing the journal entry we have to do the calculations which is shown below:

The accounts receivable is $252,500

Financial charge = 2% of accounts receivable = $252,500 × 2% = $5,050

Recourse obligation fair value = $4,940

The loss on receivables sold would be = $5,050 + $4,940 = $9,990

Reserve amount =  4% of accounts receivable = $252,500 × 2% = $10,100

Now the journal entry would be shown below:

Cash A/c Dr $237,350

Reserve A/c Dr $10,100

Loss on receivables sold A/c Dr $9,990

      To Recourse liability                             $4,940

       To Accounts receivable                      $252,500

(Being the sale of receivables with recourse is recorded)

4 0
3 years ago
Suppose OPEC oil cartel announces that it will increase production of oil. Using supply and demand analysis to predict the effec
NISA [10]

Answer:

The first step is to show where the supply curve will shift, and in this case, the supply curve will shift to the right.

This is because OPEC has decided to increase oil production, or in other words, it has decided to shift the oil supply to the right. After this, the equilibrium price will probably fall, unless demand also rises proportionally.

8 0
3 years ago
The Tanner Company's April 30 pre-reconciliation cash balance on its books was $35,000. While preparing the April 30 bank reconc
Natalija [7]

Answer:

$38,950

Explanation:

Given that,

Cash balance on its books = $35,000

Outstanding checks = $11,000

Deposits in transit = $7,000

Bank service charges = $50

Tanner's April 30 cash balance per the bank statement:

= Cash balance in books + outstanding checks - Deposits in transit - Bank service charge

= $35,000 + $11,000 - $7,000 - $50

= $38,950

Therefore, cash balance as per bank statement is $38,950.

6 0
3 years ago
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