U5 Excersises

# U5 Excersises - On July 1 2011 RossLivermore Industries...

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On July 1, 2011, Ross- Livermore Industries issued nine-month notes in the amount of \$400 million. Interest is payable at maturity. Required: Determine the amount of interest expense that should be recorded in ayear-end adjusting entry under each of the following independent assumptions: Interest Rate Fiscal year-end 1 12% 31-Dec 2 10% 30-Sep 3 9% 31-Oct 4 6% 31-Jan 1 12% 31-Dec Amount of interest 2 10% 30-Sep Amount of Interest 3 9% 31-Oct Amount of Interest 4 6% 31-Jan Amount of Interest Exercise 13-5 On January 1, 2011, Poplan Fabricators corporation agreed to grant its employees for two weeks vacation each

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year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2011, Poplan Fabricators employees each earned an average of \$900 per week. Seven hundred vacation weeks earned in 2011 were not taken during 2011. Required: Prepare the appropriate adjusting entry for vactions earned by not taken in 2011. Suppose that, by the time vacations actually are taken in 2012 wage rates for employees have risen by an average of 5 percent from their 2011 level. Also, assume wages earned in 2012 (including vacations earned and taken in 2012) were \$31 million. Prepare a journal entry that summariezes 2012 wages and the payment for 2011 vacations taken in 2012. Wages expense  (700 x \$900) Liability –  compensated future  absences  Liability –  compensated future  absences  Why no numbers? Wages expense  (\$31 million + [5% x  \$630,000])
Cash (or wages  payable) (total) Exercise 13-6 Bavarian Bar and Grill opened for business in November 2011. During its first two months of oepration,the restaurant sold gift certificates in various amounts totaling \$5,200, mostly as Chirstmas presents. They are redeemable for means within two years of the purchase date, although experience within the industry indicates that 80% of gift certificates are redeemed within one year. Certificates totaling \$1,300 were presented for redemption during 2011 for meals having a total price of \$2,100. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift certificates) are purchased. Sales taxes will be remitted

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U5 Excersises - On July 1 2011 RossLivermore Industries...

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