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Accounting 305 Chapter 5, Homework 1. Dylan Corp leases some unused warehouse space to Carter Corp for $5k/month, payable in advance. On 8/01/2013

Accounting 305

Chapter 5, Homework

  1. Dylan Corp leases some unused warehouse space to Carter Corp for $5k/month, payable in advance.  On 8/01/2013 Dylan received $60k rent from Carter for the one year period 8/01/2013 – 7/31/2014.  Required: Determine how much of this $60k rent received by Dylan on 8/01/13 should recognize in its:

income statement for the year ended 12/31/2013 as rent revenue, and 

12/31/2013 balance sheet as unearned rent revenue?

  1. Clark Corp began operations on 1/01/14 and has a fiscal year end of 12/31.  Clark rebuilds transmissions and provides a 12 month warranty on all its work.  Clark estimates that warranty performance cost will be approximately 2% of revenue.  During 2015, Clark rebuilds transmissions and charges customers a total of $600,000.   Also during 2014, Clark performs warranty work and in doing so incurs costs totaling $5,600. 

Required:

Determine the amount of warranty expense to appear in the year-end 12/31/14 income statement, and

Determine the amount of estimated warranty liability to appear in the 12/31/14 balance sheet.

  1. Assume that on 1/01/2014 Filbeck Corp issues 4 year bonds with a face value of $5 mil and a stated interest rate of 7% with interest payable annually on 12/31 and maturing on 12/31/2017.

Required:

Provide amortization tables similar to those in Exhibit 5.1 assuming that:

the market rate at issuance was 7%,

the market rate at issuance was 6%,

the market rate at issuance was 8%.

Accounting 305 Chapter 5, Homework 1. Dylan Corp leases some unused warehouse space to Carter Corp for $5k/month, payable in advance. On 8/01/2013 Dylan received $60k rent from Carter for the one year period 8/01/2013 – 7/31/2014. Required: Determine how much of this $60k rent received by Dylan on 8/01/13 should recognize in its: a) income statement for the year ended 12/31/2013 as rent revenue, and b) 12/31/2013 balance sheet as unearned rent revenue? 2. Clark Corp began operations on 1/01/14 and has a fiscal year end of 12/31. Clark rebuilds transmissions and provides a 12 month warranty on all its work. Clark estimates that warranty performance cost will be approximately 2% of revenue. During 2015, Clark rebuilds transmissions and charges customers a total of $600,000. Also during 2014, Clark performs warranty work and in doing so incurs costs totaling $5,600. Required: a) Determine the amount of warranty expense to appear in the year-end 12/31/14 income statement, and b) Determine the amount of estimated warranty liability to appear in the 12/31/14 balance sheet. 3. Assume that on 1/01/2014 Filbeck Corp issues 4 year bonds with a face value of $5 mil and a stated interest rate of 7% with interest payable annually on 12/31 and maturing on 12/31/2017. Required: Provide amortization tables similar to those in Exhibit 5.1 assuming that: a) the market rate at issuance was 7%, b) the market rate at issuance was 6%, c) the market rate at issuance was 8%.
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1
a b Income statement for the year ended 31/12/2013
Total rent received
60000
Less: rent for the period
1 Jan to 31 July,2014
35000
Rent for current year
25000
Balance Sheet as at 31/12/2013
Total...

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