ACC 201 wk4assgn1solution

ACC 201 wk4assgn1solution -...

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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
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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
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PROBLEM 7-22 (cont.) b.
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This note was uploaded on 04/18/2011 for the course ACC 201 taught by Professor Alao during the Spring '10 term at Ashford University.

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ACC 201 wk4assgn1solution -...

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