ACC 201 wk4assgn1solution

# ACC 201 wk4assgn1solution - PROBLEM719 a(1(2...

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Chapter 7 -  Accounting for Liabilities PROBLEM 7-19  a. (1) Cash paid for interest: \$60,000 x 6% x 4/12 = \$1,200 (2) Interest Expense: \$60,000 x 6% x 4/12 =  \$1,200 \$50,000 x 6% x 2/12 =                    500     Total Interest Expense \$1,700 (3) Warranty Expense: \$310,000 x 1% =  \$3,100 b. Interest Payable Sales Tax Payable 6. 1 500 2. 2 21,700 Bal. 500 4. 3 (19,600) Bal. 2,100 1 \$50,000 x 6% x 2/12 = \$500 2 \$310,000 x 7% = \$21,700 3 \$280,000 x 7% = \$19,600 Warranty Payable Notes Payable 3. 4‘ 3,100 7. ( 2,400) 1. 60,000 5. (60,000) Bal. 700 6. 50,000 Bal. 50,000 4 \$310,000 x 1% = \$3,100 Chandra Company Current Liabilities Interest Payable \$   500 7-1

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Sales Tax Payable 2,100 Warranty Payable 700 Notes Payable 50,000 Total Current Liabilities \$53,300 Note:  The contingent liability is not recorded since it cannot be reasonably  estimated. 7-2
PROBLEM 7-19 (cont.) c. Even t Asset s = Liab. + Equit y Rev. - Exp. = Net  Inc. Cash Flow 1. + + NA NA NA NA + FA 2. + + + + NA + + OA 3. NA + - NA + - NA 4. - - NA NA NA NA - OA 5. - - - NA + - - OA - FA 6. + + NA NA NA NA + FA 7. - - NA NA NA NA - OA 8. NA NA NA NA NA NA NA 7-3

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PROBLEM 7-22 a. Holmes Co. Amortization Schedule \$80,000, 3-Yr. Term Note, 7% Interest Rate Year Prin. Bal.  on Jan 1 Cash Pay.  Dec. 31 Applied to  Interest Applied to Principal Prin. Bal.  End of Period 2008 \$80,000 \$30,484 \$5,600 \$24,884 \$55,116 2009 55,116 30,484 3,858 26,626 28,490 2010 28,490 30,484 1,994* 28,490 -0- *Adjusted due to rounding 7-4
PROBLEM 7-22 (cont.) b.

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ACC 201 wk4assgn1solution - PROBLEM719 a(1(2...

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