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ACCT 301B Spring 2010 Midterm A

# ACCT 301B Spring 2010 Midterm A - ACCT 301B Spring 2010...

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ACCT 301B Spring 2010 Midterm Examination; Closed books and notes; no scrap paper; no programmable calculators or other devices; assigned seats. 1. During 2009, Vanpelt Co. introduced a new line of machines that carry a three- year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2009 \$ 600,000 \$ 9,000 2010 1,500,000 45,000 2011 2,100,000 135,000 \$4,200,000 \$189,000 What amount should Vanpelt report as a liability at December 31, 2011? \$_____________________________________________________________________ Required: Show your supporting computations below to receive credit for correct answers. Professor Paul Sheldon Foote, California State University, Fullerton 1

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ACCT 301B Spring 2010 Midterm Examination; Closed books and notes; no scrap paper; no programmable calculators or other devices; assigned seats. 2. Palmer Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Palmer Frosted Flakes boxes and \$1.10. The company estimates that 60% of the boxtops will be redeemed. In 2010, the company sold 675,000 boxes of Frosted Flakes and customers redeemed 330,000 boxtops receiving 110,000 bowls. If the bowls cost Palmer Company \$2.50 each, how much liability for outstanding premiums should be recorded at the end of 2010? \$_____________________________________________________________________ Required: Show your supporting computations below to receive credit for correct answers. Professor Paul Sheldon Foote, California State University, Fullerton 2
paper; no programmable calculators or other devices; assigned seats. 3. Delhi Co. is preparing its financial statements for the year ended December 31, Year 1. Accounts payable amounted to \$370,000 before any necessary year- end adjustment related to the following: --At December 31, Year 1, Delhi has a \$50,000 debit balance in its accounts payable to Madras, a supplier, resulting from a \$50,000 advance payment for goods to be manufactured to Delhi’s specifications. --Checks in the amount of \$100,000 were written to vendors and recorded on December 29, Year 1. The checks were mailed on January 5, Year 2. What amount should Delhi report as accounts payable in its December 31, Year 1 balance sheet? \$_____________________________________________________________________ Required: Show your supporting computations below to receive credit for correct answers. Professor Paul Sheldon Foote, California State University, Fullerton

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ACCT 301B Spring 2010 Midterm A - ACCT 301B Spring 2010...

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