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slavikrds [6]
3 years ago
14

Computer Wholesalers restores and resells notebook computers on eBay. It originally acquires the notebook computers from corpora

tions upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately 4% of sales. By the end of the first year, sales and actual warranty expenditures are $490,000 and $17,500, respectively1. Does this situation represent a contingent liability? Yes No2. Record the necessary entries in Journal Entries3. What is the balance in the Warranty Liability account after the entries in Part 2?
Business
1 answer:
Fantom [35]3 years ago
5 0

Answer:

1. Yes

2. Dr Warranty expense $19,600

Cr Warranty Liability $19,600

Dr Warranty Liability $17,500

Cr Cash $17,500

3. $2,100

Explanation:

1. Yes, based on the information given this situation represent a contingent liability reason been that a contingent liability is tend to be probable because the amount can be estimated.

2. Preparation to Record the necessary entries in Journal Entries

Dr Warranty expense $19,600 (490,000*4%)

Cr Warranty Liability $19,600

Dr Warranty Liability $17,500

Cr Cash $17,500

3. Calculation for the balance in the Warranty Liability account after the entries in Part 2

Balance in the Warranty Liability=$19,600-$17,500

Balance in the Warranty Liability=$2,100

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Interest is capitalized when incurred in connection with the construction of plant assets because_______.
Alisiya [41]

Interest is capitalized when incurred in connection with the construction of plant assets because, during construction, the asset is not generating revenue

<h3>What is Interest?</h3>

This refers to the amount or rate that is added to a principal amount and this is usually done when a loan is collected.

Hence, we can see that when plant assets are being constructed, interest is capitalized and the main reason why this happens is that the asset is not generating revenue.

Furthermore, actual interest is the only thing that should be capitalized and this is because, during construction, the asset is not generating revenue and therefore companies should defer (capitalize) interest cost.

Thus, Interest is capitalized when incurred in connection with the construction of plant assets because, during construction, the asset is not generating revenue.

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7 0
2 years ago
Why does a bank sometimes hold excess reserves?
Nastasia [14]
The answer to the question above is "To maintain its liquidity if customers make demand whether its withdrawal or saving" based on the reserves meaning. A central bank holds the commercial banks excess of capital to maintain their liquidity. A bank will always have the liquidity risk to its business. This reserve is made to assure banks' liquidity.
5 0
3 years ago
Read 2 more answers
These are financial protections that were created to ensure that certain types of facilities (that is, cancer hospitals and chil
Hunter-Best [27]

Answer:

Hold harmless.

Explanation:

It defines hold harmless as follows: To absolve (another party) from any responsibility for damage or other liability arising from the transaction.

6 0
3 years ago
Thorkfeld Company incurred depreciation expenses of $28,900 last year. The sales were $755,000 and the addition to retained earn
blondinia [14]

Answer:

Cost of Goods Sold is = $697213.44

Explanation:

given data

depreciation expenses = $28,900

sales = $755,000

retained earnings = $10,200

paid interest = $6,200

dividends = $5,000

tax rate = 33 percent

solution

first we get here EBIT that is express as here

EBIT =  Earnings for equity holders + Tax + Interest    ...............1

Earnings for equity holders = Dividend Paid + retained earnings

Earnings for equity holders = $5,000 + $10,200 = $15200

here Tax is = \frac{15200}{67} × 33 = 7486.56

so here EBIT  = $15200 + $7486.56 + $6,200

EBIT  = $28886.56

so Cost of Goods Sold is = sales - depreciation -  EBIT   ..................2

Cost of Goods Sold is = $755,000 - $28,900 - $28886.56

Cost of Goods Sold is = $697213.44

3 0
3 years ago
Multiple Choice Best Buy decided to bring in Hubert Joly as CEO to replace Brian Dunn. Amazon has many strategically located dis
Fynjy0 [20]

Complete question reads;

Which of the following is not a reason Best Buy has had a hard time competing with Amazon? Multiple Choice

a. Best Buy decided to bring in Hubert Joly as CEO to replace Brian Dunn.

b. Amazon has many strategically located distribution centers across the United States.

c. Best Buy had significant expenses that did not help improve sales.

d. Amazon has a deep supply of products to draw from.

e. Best Buy has faced some key leadership challenges.

Answer:

a

Explanation:

Noteworthy is the fact that Hubert Joly's arrival into Best Buy was indeed a blessing to the company because within a year after he came in 2012, the company's stock value more than doubled in 2013.

He further improved the company's customer interactions, plus greater price competitiveness during his leadership.

6 0
3 years ago
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