An entity recognized the following transactions during 2019: The entity estimated its annual warranty expense at 2% annual net sales: 4,000,000 Net sales Warranty liability: December 31, 2018 Warranty payment during 2019 60,000 credit 50,000 The entity was sued by a competitor for P1,500,000 for infringement of a trademark. Based on the advice of the company's legal counsel, the entity accrued the sum of P1,000,000 as a provision in its financial statements for the year ended December 31, 2019. On February 15, 2020, the court decided in favor of the plaintiff and ordered the entity to pay a sum of P1,400,000. The financial statements were prepared by the entity's management on January 31, 2020 and authorized for issue on March 1, 2020. 8. What total amount of expenses should be recognized for the year ended December 31, 2019? a. 1,480,000 b. 1,080,000 c. 1,450,000 d. 1,050,000 9. What total amount of liabilities should be recognized on December 31, 2019? a. 1,090,000 b. 1,490,000 c. 1,450,000 d. 1,050,000

An entity recognized the following transactions during 2019: The entity estimated its annual warranty expense at 2% annual net sales: 4,000,000 Net sales Warranty liability: December 31, 2018 Warranty payment during 2019 60,000 credit 50,000 The entity was sued by a competitor for P1,500,000 for infringement of a trademark. Based on the advice of the company's legal counsel, the entity accrued the sum of P1,000,000 as a provision in its financial statements for the year ended December 31, 2019. On February 15, 2020, the court decided in favor of the plaintiff and ordered the entity to pay a sum of P1,400,000. The financial statements were prepared by the entity's management on January 31, 2020 and authorized for issue on March 1, 2020. 8. What total amount of expenses should be recognized for the year ended December 31, 2019? a. 1,480,000 b. 1,080,000 c. 1,450,000 d. 1,050,000 9. What total amount of liabilities should be recognized on December 31, 2019? a. 1,090,000 b. 1,490,000 c. 1,450,000 d. 1,050,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 28E: On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First...

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Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
Restructuring (Debtor) Oakwood Corporation is delinquent on a 2,400,000, 10% note to Second National Bank that was due January 1, 2019. At that time, Oakwood owed the principal amount plus 34,031.82 of accrued interest. Oakwood enters into a debt restructuring agreement with the bank on January 2, 2019. Required: Prepare the journal entries for Oakwood to record the debt restructuring agreement and all subsequent interest payments assuming the following independent alternatives: 1. The bank extends the repayment date to December 31, 2022, forgives the accrued interest owed, reduces the principal by 200,000, and reduces the interest rate to 8%. 2. The bank extends the repayment date to December 31, 2022, forgives the accrued interest owed, reduces the principal by 200,000, and reduces the interest rate to 1%. 3. The bank accepts 160,000 shares of Oakwoods 55 par value common stock, which is currently selling for 14.50 per share, in full settlement of the debt. 4. The bank accepts land with a fair value of 2,300,000 in full settlement of the debt. The land is being carried on Oakwoods books at a cost of 2,200,000.