ACCT 320 Hinson 2-2 Week Two Practice Exercises

ACCT 320 Hinson 2-2 Week Two Practice Exercises - actual...

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ACCT 320 Assignment 2-2 Week Two Practice Exercises Jamie Hinson September 17, 2008 E13-9 Interstate Farm Implements For the Year Ended December 31, 2006 Cash $7,500 Unearned revenue $7,500 Bradley Farms purchase of $98,000 tractor Cash $25,500 Liability - Refundable deposits $25,500 Refundable deposits for containers to transport equipment parts Cash / Accounts Receivable $800,000 Sales revenue $744,000 Sales taxes payable (5% state, 2% local) $56,000 Total credit sales and taxes calculated E13-10 According to our text book, Long-term obligations usually are classified and reported as current liabilities when they become payable within the upcoming year. Short-term obligations that are expected to be refinanced on a long-term basis can be reported as non-current, rather than current, liabilities only if two conditions are met. The firm (1) must intend to refinance on a long-term basis and (2) must actually have demonstrated the ability to do so. Ability to refinance on a long-term basis can be demonstrated by either an existing refinancing agreement or by
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Unformatted text preview: actual financing prior to the issuance of the financial statements. Some large corporations obtain temporary financing by using commercial paper, often purchased by other companies as a short-term investment. As for Sprint Corporation, it seems as though they reported the debt as a current liability so they could be reported as non-current in order to be financed on a long-term basis. E13-12 1. No there was not a loss contingency because 3% of sales would actually be $150,000, which is considerably less than $37,500 on what was actually spent on warranty expenditures. 2. Cash / Accounts receivable $5,000,000 Sales revenue $4,962,500 Liability – warranty expenditure $37,500 Revenue calculated after warranty expenditure liability 3. Cupola should report the actual warranty expenditure amount of $37,500 for 2006, not what was estimated at the beginning of the year (3% of sales)....
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This note was uploaded on 09/08/2010 for the course ACCOUNTING 320 taught by Professor Hickman during the Spring '10 term at Heidelberg.

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ACCT 320 Hinson 2-2 Week Two Practice Exercises - actual...

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