Chapter8 ID 110-00-3261 - Homework for Chapter 8 ACTG 500...

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Homework for Chapter 8 ACTG – 500 MONIKA PATEL ID 110-00-3261 Solution S8-1.1: JOURNAL DATE ACCOUNTS DEBIT CREDIT 20X7 Mar. 31 Inventory $10,000 Note Payable, Short-term 10,000 JOURNAL DATE ACCOUNTS DEBIT CREDIT 20X7 Dec. 31 Interest Expense $750* Interest Payable 750 *Interest Expense: $10,000 * 0.10* 9/12 = $750 JOURNAL DATE ACCOUNTS DEBIT CREDIT 20X8 Mar. 31 Note Payable, Short-term 10,000 Interest Payable 750 Interest Expense 250* Cash 11,000 *Interest Expense: $10,000*0.10*3/12 = 250 SolutionS8-2: BALANCE SHEET: Balance Sheet           December 31, 20X7 Assets Liabilities    Current liabilities:          Note Payable, Short-term………
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Interest Payable: $10,000 * 0.10* 9/12 = $750 INCOME STATEMENT: Interest Expenses: $10,000 * 0.10* 9/12 = $750 SolutionS8-2.2.: The Income Statement of the Year Ended in December 31, 20X8 the company will report the Interest Expense Interest expense: $10,000*0.10*3/12 = $250 SolutionS8-3.1.: JOURNAL DATE ACCOUNTS DEBIT CREDIT Cash * 50,000 Notes Receivable* 450,000 Sales Revenue 500,000 Warranty Expense* 15,000 Estimated Warranty Payable 15,000 Estimated Warranty Payable 12,000 Cash 12,000 *Cash: $500,000 *0.10 = 50,000 *Notes Receivable: $500,000 - $50,000 = $450,000 *Warranty Expense: $500,000 * 0.03 = $15,000 Income Statement        Year Ended December 31, 20X7 Revenues: Expenses:     Interest expense ………………………………. .$750
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SolutionS8-3.2.: Estimated Warranty Payable Bal. 10,000 12,000 15,000 Bal. 13,000 ((10,000 + 15,000) – 12,000) SolutionS8-4: Lakeland Nissan will report the Warranty Expense = $15,000 in the year 20X0. The Matching Principle addresses the above situation. The Warranty expense for the year does not necessarily equal the year’s cash payments for warranties. Because the cash payments for warranties do not determine the amount of warranty expense for that year. The exact amount of
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Chapter8 ID 110-00-3261 - Homework for Chapter 8 ACTG 500...

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