Solutions to Selected Problems from the Text -- Chapter 11

Solutions to Selected Problems from the Text -- Chapter 11...

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COMMERCE 450 FALL 2011 SOLUTIONS TO SELECTED PROBLEMS FROM THE TEXT CHAPTER 11 SOLUTIONS ARE PROVIDED TO THE FOLLOWING PROBLEMS: P11-9 P11-18 P11-22 P11-29 P11-30 P11-9. Suggested solution: 1. Dr. Warranty expense 30,000 Cr. Provision for warranty obligations 30,000 2,500 × ($5 + $7) = $30,000 2. Dr. Provision for warranty obligations 6,000 Cr. Wage expense 6,000 3. The total provision for warranty obligations that will be reported at year-end is $24,000 ($30,000 – $6,000). Of this amount, $6,500 will be reported as a current obligation [(2,500 × $5) – $6,000 = $6,500] and the $17,500 balance as a non-current liability (2,500 × $7 = $17,500) or ($24,000 – $6,500 = $17,500). * * * * * P11-18. Suggested solution: a. Dr. Cash 5,000,000 Cr. Earned revenue 5,000,000 (1,000 × $5,000 = $5,000,000) Dr. Cost of goods sold 4,000,000 Cr. Inventory 4,000,000 [$5,000,000 / (1 + 25%) = $4,000,000] Dr. Warranty expense 400,000 Cr. Provision for warranty payable 400,000
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(1,000 × $400 = $400,000) Dr. Provision for warranty payable 170,000 Cr. Parts inventory 50,000 Cr. Wage expense 120,000 b. Dr. Cash 5,000,000 Cr. Earned revenue 5,000,000 (1,000 × $5,000 = $5,000,000) Dr. Cost of goods sold 4,000,000 Cr. Inventory 4,000,000 [$5,000,000 / (1 + 25%) = $4,000,000] Dr. Warranty expense 170,000 Cr. Parts inventory
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This note was uploaded on 12/10/2011 for the course COMM 450 taught by Professor Jackes during the Spring '10 term at UBC.

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Solutions to Selected Problems from the Text -- Chapter 11...

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