Ch 13 Solutions.doc

# Ch 13 Solutions.doc - Solution to BE13-1 Interest expense...

• Homework Help
• 11

This preview shows page 1 - 3 out of 11 pages.

Solution to BE13-1 Interest expense on the trade notes payable during the current year is: \$20,250 = \$450,000 x 9% x 6 / 12 The journal entry to record the purchase of inventory and issuance of the trade notes payable is: Account February 1 Inventory 450,000 Notes Payable 450,000 The journal entry to record the payment of the trade notes payable and interest is: Account August 1 Notes Payable 450,000 Interest Expense 20,250 Cash 470,250 Solution to BE13-2 The entry required to record the cash collection for the four-year subscriptions is presented below. Account June 1, Current Year Cash 432,000 Unearned Subscription Revenue 432,000 Since the subscription on-line access is based on time, income is earned evenly over the life of the contract. Tedesco will recognize \$9,000 in revenue each month (\$432,000 / 48 months). At the end of the fiscal year, seven months of subscription revenue (\$63,000) is earned since access to the online publication has been allowed for that period of time. The adjusting entry to record the income earned in the current period is presented below. Account December 31, Current Year Unearned Subscription Revenue 63,00 0 Subscription Revenue 63,000 At the end of the current year, the balance of unearned revenue is \$369,000 (\$432,000 - \$63,000).

Subscribe to view the full document.

Solution to BE13-4 On the date Coral sells the gift cards, it records the following journal entry: Account May 25 Cash 1,400 Unearned Revenue—Gift Cards 1,400 When the gift cards are redeemed on June 29, Coral makes the following journal entry. Account June 29 Unearned Revenue—Gift Cards 800 Sales Revenue—Gift Cards 800 Cost of Goods Sold 425 Inventory 425 Solution to BE13-5 Evergreen reports the \$12,000 (\$1,000 x 12) deposit as a liability when it delivers the dumpsters to the customers. Account Inventory Delivered to the Customer Cash 12,000 Deposit Liability 12,000 When the ten dumpsters are returned to Evergreen and the deposit is refunded to the customer, then Evergreen will make the following journal entry. Account Dumpsters Returned Deposit Liability 10,000 Cash 10,000 If the customer damages the dumpsters and does not return them to Evergreen, then Evergreen removes the liability and recognizes revenue and the cost of sales related to the dumpsters. The cost of each dumpster is \$700 —so with two dumpsters not returned, the total cost of sales is \$1,400 (2 x \$700). Account Dumpsters Not Returned
Deposit Liability 2,000 Dumpster Sales Revenue 2,000 Cost of Goods Sold 1,400 Dumpster Inventory 1,400 Solution to BE13-6 Account Current month sales Cash (or Accounts Receivable) 2,714,130 Sales Revenue 2,560,500 Sales Tax Payable (\$2,560,500 x 6%) 153,630 Solution to BE13-8
You've reached the end of this preview.
• Spring '14
• TeresaT.King

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern