Exam 10: Current Liabilities and Fair Value Accounting

Of a company's employees, 50 percent typically qualify to receive two weeks' paid vacation a year (50 weeks). The entry to record the estimated liability for vacation pay for a week in which the total payroll is $4,400

Use this information to answer the following question. The following totals for the month of November were taken from the payroll register of Levine Company: The journal entry to record the monthly payroll on November 30 would include a

Calculate answers to the following questions: a. To what amount will an $800 deposit grow, assuming 9 percent annual interest, five years, and simple interest? b. To what amount will a $500 deposit grow, assuming 10 percent annual interest paid semiannually, three years, and simple interest?

A company sells merchandise on a deferred payment plan, ultimately receiving $5,000 on the account receivable. On the payment date, the company would

The higher the interest rate, the lower the present value factor.

Assets purchased under a deferred payment plan should be recorded at the future value of the installment payments.

Which of the following is both an estimated liability and a contingent liability?

During July, Audio City sold 200 radios for $50 each. Each radio had cost Audio City $31 to purchase and carried a two-year warranty. If 5 percent typically need to be replaced over the warranty period and one actually is replaced during July, the entry to record the Product Warranty Expense is

The amount of property tax payable is usually an estimated liability for a portion of the year.

A liability is recognized when

Heidi wishes to deposit an amount into her savings account that will enable her to withdraw $800 per year for the next four years. She should deposit $800, multiplied by the

A customer is injured using a company's product. The potential liability that may result is called a(n)

Kahn Company had cash sales of $60,000 for the month of June. Sales are subject to a 4 1/2 percent sales tax and a 6 percent excise tax. In the journal provided, prepare a compound entry without explanations to record Kahn's sales and related sales and excise taxes for the month.

Calculate answers to the following questions using future value and/or present value tables. a. Tally purchased machinery by executing a $30,000 non-interest-bearing note due in four years. For how much should the machinery be recorded, assuming that the going rate for similar notes is 6 percent? b. Mindy Kwon is making bank deposits of $3,000 at the end of each year for five years, for purposes of buying a car. Assuming an interest rate of 7 percent, how expensive car will she be able to purchase? c. To how much will $2,000 grow, assuming it is invested for 2-1/2 years, with interest of 8 percent, compounded quarterly? d. Liz Astor would like to make a lump-sum deposit today so that she can withdraw $10,000 at the end of each year for the next three years. Assuming a 9 percent interest rate, what should she invest today?

Use this information to answer the following question. Periods Present Value of \ 1 at 7 Percent Present Value of Ordinary Annuity of \ 1 at 7 Percent 1 0.935 0.935 2 0.873 1.808 3 0.816 2.624 If $100 is invested, how much will it grow to at the end of the three years?

The product warranty liability is an example of an estimated liability.

Calculate answers to the following questions using future value and/or present value tables. a. If $100 is deposited in an account paying 8 percent simple interest, what will be the value of the account in five years? b. If an accumulation of $4,000 is desired at the end of four years, what amount must be deposited now to accomplish that goal, assuming 12 percent interest compounded annually? c. A deposit of $1,000 made at the end of every six months for five years will grow to what amount, assuming 10 percent interest compounded semiannually? d. What is the present value of $150 received at the end of each year for 4 years, assuming 9 percent interest compounded annually? e. What amount must be deposited at the bank today to grow to $10,000 in five years, assuming 14 percent interest compounded semiannually?

On December 1, Boston Pizza borrowed $40,000 from the bank, issuing a 90-day, 15 percent promissory note. Interest is in addition to the face value. In the journal provided, prepare Boston Pizza's December 1 entry, December 31 adjusting entry without explanations for accrued interest, and March 1 entry at maturity. Round to the nearest whole dollar.

What would be the adjusting entry for a note payable whose interest is not included in the face amount of the note?

A business accepts a 9 percent, $25,000 note due in 120 days. Assuming simple interest, how much (amount rounded) will the business receive when the note falls due?