Exam 13: Current Liabilities and Contingencies

On December 1, 2010, Brothers, Inc.borrowed money at the bank by signing a 90-day non-interest-bearing note for $40, 000 that was discounted at 12%.Which of the following entries is not correct?

As a tutor for beginning accounting students, you are reviewing the first balance sheet of one of your students.You make the comment that current liabilities can be classified into three groups and your student does not believe you. Required: Write a brief note that identifies the three groups, including an explanation of the nature of the accounts included in each group.

On January 1, 2010, the Long Company signed a six-month, non-interest-bearing note payable for $160, 000 and received $152, 800 from Friendly Bank.On January 31, 2010, what amount should Long record for interest expense, and what is the net carrying value of the note?

Hair Affairs reports the following payroll information for May, 2010: Type of Gross Federal Income Savings Bonds Salary Pay Tax Withheld Withheld Sales \ 10,000 \ 2,200 \ 200 Office 3,000 600 300 \1 3,000 \2 ,800 \5 00 Tax rate information follows: FICA 7.0\% Federal unemployment 0.8\% State employment 5.4\% Assume that all wages are subject to all payroll taxes. Required: Prepare the journal entries to record the payment of the May, 2010, payroll and the payroll taxes imposed on the employer.

Liabilities whose amounts must be estimated are disclosed in financial statements by

Which of the following is the best rationale for the recommended method of accounting for advertising cost?

When a contingency must be accrued under IFRS, the charge is referred to as

Exhibit 13-5 Tractor Company estimates its annual warranty expense at 4% of annual net sales.The following information relates to the calendar year 2010: Net sales \ 3,000,000 Estimated liability under warranties: January 1,2010 100,000 December 31,2010 , after year-end adjustment 80,000 - Refer to Exhibit 13-5.The amount of warranty expense for 2010 is

Conceptually, all liabilities should be reported on the balance sheet at

Consolidated Business Services introduced a new machine on January 1, 2010.The machine carried a two-year warranty against defects.The estimated warranty costs related to dollar sales were 3% in the year of sale and 5% in the year after sale.Additional information follows: Actual Werranty Year Sales Expenditures 2010 \ 50,000 \ 900 2011 80,000 4,200 If the expense warranty accrual method is used, what amount relating to warranties should be reflected on the December 31, 2011, balance sheet?

Which of the following loss contingencies is not usually accrued?

Concerning accounting for warranties, which of the following statements is true?

On December 1, 2010, Young Co.borrowed money at the bank by signing a 90-day non-interest-bearing note for $24, 000 that was discounted at 8%.Which of the following entries is correct?

FASB established the use of the terms "probable, " "reasonably possible, " and "remote." It adopted these terms because

Which of the following contingencies is usually not accrued in the accounts?

According to current GAAP, which of the following is not a condition suggesting that an accrual for vacation pay be made?

Which of the following statements is true?

Which is not a characteristic of a liability?

The Peters Company is affected by the following contingencies at the end of 2010: What total amount should Peters accrue for loss contingencies in 2010?