At the end of 2022, the following information is available for Great Adventures. Additional interest for five months needs to be accrued on the $32,200, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31. Assume that $12,200 of the $32,200 loan discussed above is due next year. By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $27,200 during the year and recorded those as Deferred Revenue. Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $14,200. For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $6,200. No Date General Journal Debit Credit 1 Dec 31 Interest Expense 805 Interest Payable 805 2 Dec 31 Notes Payable (Long-term) 12,200 Notes Payable (Current) 12,200 3 Dec 31 Deferred Revenue 20,000 Sales Revenue 20,000 4 Dec 31 Loss 14,200 Contingent Liability 14,200 5 Dec 31 Warranty Expense 6,200 Warranty Liability 6,200 6 Dec 31 Service Revenue Interest Revenue Sales Revenue Retained Earnings 7 Dec 31 Retained Earnings Supplies Expense Salaries Expense Interest Expense Income Tax Expense Insurance Expense Warranty Expense 6,200
At the end of 2022, the following information is available for Great Adventures. Additional interest for five months needs to be accrued on the $32,200, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31. Assume that $12,200 of the $32,200 loan discussed above is due next year. By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $27,200 during the year and recorded those as Deferred Revenue. Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $14,200. For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $6,200. No Date General Journal Debit Credit 1 Dec 31 Interest Expense 805 Interest Payable 805 2 Dec 31 Notes Payable (Long-term) 12,200 Notes Payable (Current) 12,200 3 Dec 31 Deferred Revenue 20,000 Sales Revenue 20,000 4 Dec 31 Loss 14,200 Contingent Liability 14,200 5 Dec 31 Warranty Expense 6,200 Warranty Liability 6,200 6 Dec 31 Service Revenue Interest Revenue Sales Revenue Retained Earnings 7 Dec 31 Retained Earnings Supplies Expense Salaries Expense Interest Expense Income Tax Expense Insurance Expense Warranty Expense 6,200
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7MC: Using the information provided, what transaction represents the best application of the present...
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At the end of 2022, the following information is available for Great Adventures.
- Additional interest for five months needs to be accrued on the $32,200, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31.
- Assume that $12,200 of the $32,200 loan discussed above is due next year.
- By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $27,200 during the year and recorded those as Deferred Revenue.
- Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $14,200.
- For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $6,200.
No | Date | General Journal | Debit | Credit |
---|---|---|---|---|
1 | Dec 31 | Interest Expense | 805 | |
Interest Payable | 805 | |||
2 | Dec 31 | Notes Payable (Long-term) | 12,200 | |
Notes Payable (Current) | 12,200 | |||
3 | Dec 31 | Deferred Revenue | 20,000 | |
Sales Revenue | 20,000 | |||
4 | Dec 31 | Loss | 14,200 | |
14,200 | ||||
5 | Dec 31 | Warranty Expense | 6,200 | |
Warranty Liability | 6,200 | |||
6 | Dec 31 | Service Revenue | ||
Interest Revenue | ||||
Sales Revenue | ||||
7 | Dec 31 | Retained Earnings | ||
Supplies Expense | ||||
Salaries Expense | ||||
Interest Expense | ||||
Income Tax Expense | ||||
Insurance Expense | ||||
Warranty Expense | 6,200 |
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