SOLUTIONS Chapter 13

SOLUTIONS Chapter 13 - SOLUTIONS Chapter 13 BRIEF EXERCISE...

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Unformatted text preview: SOLUTIONS Chapter 13 BRIEF EXERCISE 13-1 July 1 Purchases ................................................................................ 60,000 Accounts Payable ......................................................... 60,000 Freight-in.................................................................................. 1,200 Cash ............................................................................. 1,200 July 3 Accounts Payable .................................................................... 6,000 Purchase Returns and Allowances ............................... 6,000 July 10 Accounts Payable .................................................................... 54,000 Cash ($54,000 X 98%) ................................................. 52,920 Purchase Discounts...................................................... 1,080 BRIEF EXERCISE 13-2 11/1/10 Cash .................................................................................. 40,000 Notes Payable ........................................................ 40,000 12/31/10 Interest Expense ................................................................ 600 Interest Payable ($40,000 X 9% X 2/12) ........................................ 600 2/1/11 Notes Payable .................................................................... 40,000 Interest Payable ................................................................. 600 Interest Expense ................................................................ 300 Cash [($40,000 X 9% X 3/12) + $40,000] ..................... 40,900 BRIEF EXERCISE 13-3 11/1/10 Cash ..................................................................................... 60,000 Discount on Notes Payable ................................................... 1,350 Notes Payable ........................................................... 61,350 12/31/10 Interest Expense ................................................................... 900 Discount on Notes Payable ($1,350 X 2/3) ......................................................... 900 BRIEF EXERCISE 13-3 (Continued) 2/1/11 Interest Expense .................................................................... 450 Discount on Notes Payable ........................................ 450 Notes Payable ....................................................................... 61,350 Cash ........................................................................... 61,350 BRIEF EXERCISE 13-4 (a) Since both criteria are met (intent and ability ), none of the $500,000 would be reported as a current liability. The entire amount would be reported as a long-term liability. (b) Because repayment of the note payable required the use of existing 12/31/10 current assets, the entire $500,000 liability must be reported as current. (This assumes Burr had not entered into a long-term agreement prior to issuance.) BRIEF EXERCISE 13-5 8/1/10 Cash ................................................................................... 216,000 Unearned Subscription Revenue...
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SOLUTIONS Chapter 13 - SOLUTIONS Chapter 13 BRIEF EXERCISE...

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