acct504 Chapter 9 Short Exercise Solutions

acct504 Chapter 9 Short Exercise Solutions - Chapter 9...

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Chapter 9 Liabilities Short Exercises (10 min.) S 9-1 Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT 2012 July 31 Inventory…………………………………………… 11,000 Note Payable, Short-Term…………………… 11,000 Purchased inventory by issuing a note payable. 2013 Apr. 30 Interest Expense ($11,000 × .12 × 9/12)……….. 990 Interest Payable……………………………….. 990 Accrued interest expense. July 31 Note Payable, Short-Term……………… ............ 11,000 Interest Payable…………………………………… 990 Interest Expense ($11,000 × .12 × 3/12)……….. 330 Cash……………………………………………… 12,320 Paid note payable and interest at maturity. Balance Sheet on April 30, 2013: Note payable, short-term $11,000 Interest payable 990 Income Statement, April 30, 2013: Interest Expense $990 9-1 Chapter 9 Liabilities
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(5-10 min.) S 9-2 Req. 1 2012 2011 Accounts payable turnover: COGS Average accounts payable $2,700,000 = 9 $300,000 $2,500,000 = 10 $250,000 Days payable outstanding: 365 Accounts payable turnover 365 = 41 days 9 365 = 37 days 10 Req. 2 The company’s liquidity position has deteriorated during 2012. 9-2 Financial Accounting 9/e Solutions Manual
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(10 min.) S 9-3 Req. 1 Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT Cash ($564,000 × .40)…………………..….. 225,600 Notes Receivable ($564,000 $255,600).. 338,400 Sales Revenue…………………………… 564,000 To record sales on account. Warranty Expense ($564,000 × .05)……… 28,200 Estimated Warranty Payable……….…. 28,200 To accrue warranty expense. Estimated Warranty Payable……………... 18,000 Cash…………………………………….…. 18,000 To pay warranty claims. Req. 2 Estimated Warranty Payable Bal. 13,000 18,000 28,200 Bal. 23,200 (5-10 min.) S 9-4 Warranty expense = $28,200 The expense recognition principle addresses this situation.
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