ACCT 301B Fall 2010 Midterm A with Answers

ACCT 301B Fall 2010 Midterm A with Answers - ACCT 301B Fal...

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Unformatted text preview: ACCT 301B Fal 2010 Midterm Examination- closed bo ks and notes 1 Profes or Paul Sheldon Fo te, California State University, Fulerton 1During Year 1, Brunei Co. introduced a new product car ying a 2-year war anty against defects. The estimated war anty costs related to dolar sales are: 3%within 12 months folowing the sale and 5%in the second 12 months folowing the sale Sales and actual war anty expenditures for the years ended December 31, Year 1 and Year 2, are as folows: Sales Actual War anty Expenditures Year 1 20 ,0 0 3,0 0 Year 2 30 ,0 0 8,0 0 50 ,0 0 1 ,0 0 Required: What amount should Brunei report as estimated war anty liability in its December 31, Year 2, balance she t? 29,0 0 $_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Required sup orting computations to receive credit for cor ect answers: Estimated Liability for War anties for Year 1 Sales 16,0 0 Estimated Liability for War anties for Year 2 Sales 24,0 0 Total credits to Estimated Liability ac ount 40,0 0 Actual War anty Expenditures, Year 1 3,0 0 Actual War anty Expenditures, Year 2 8,0 0 Total debits to Estimated Liability ac ount 1 ,0 0 Estimated Liability for War anties, December 31, Year 2 29,0 0 2Scotia, Inc. has notes payable due June 15, Year 2 in the amount of 2milion dolars. At the financial statement date of December 31, Year 1, Scotia signed an agre ment to bor ow to refinance the notes payable on a noncur ent basis up to: 2milion dolars. The financing agre ment caled for bor owings not to exce d 85%of the value of the colateral Scotia was providing. At the date of is ue of the December 31, Year 1, financial statements, the value of the colateral was 2.3milion dolars and was not expected to fal below this amount during Year 2. Required: In its December 31, Year 1, balance she t, Scotia should clas ify as cur ent obligations notes payable in the amount of: 45,0 0 $_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Required sup orting computations to receive credit for cor ect answers:...
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This note was uploaded on 11/08/2011 for the course ECON 102 taught by Professor Smith during the Spring '11 term at Saddleback.

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