FA08Quiz8Key - cash), Income Tax Expense, and the Deferred...

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Financial Accounting Quiz 8 Name: Fall 2008 1. (1 point) W Company has a beginning Warranty Liability of $10. During the year, Warranty Expense is $5, while actual warranty costs (mostly related to previous years’ sales) were $4. What is the balance in the Warranty Liability account at the end of the year? 2. (1 point) Warranty costs are deductible when paid for tax purposes while expensed in the period of the related sale (estimated in advance) for financial reporting. New Company has $100 in sales, records $10 in Warranty Expense, and has no warranty costs. The tax rate is 30%. Provide the journal entry to record Current Taxes to the IRS (assume they are paid in
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Unformatted text preview: cash), Income Tax Expense, and the Deferred Tax Asset or Liability. 3. (2 points) On January 1, 2008, L Company leases a computer. The lease calls for 2 lease payments: $110 on December 31, 2008 and $121 on December 31, 2009. The title of the computer will remain with the lessor. There is no bargain purchase option, and the estimated life of the computer is 3 years. At the lease inception, the fair market value of the computer is $220. The appropriate discount rate is 10%. Provide all journal entries related to the lease. (Only annual financial statements are to be prepared.)...
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FA08Quiz8Key - cash), Income Tax Expense, and the Deferred...

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