Chapter 9 Accounting

On 1/1/16 you have a $10,000 Bond, 8%, and the market rate is 10%. It is discounted semi-annually 1. Find the interest Payment 2. Find the principal payment 3. Add the two together to get the present value of the bond 4. Make the journal entry Present value of annuity at $1 with an interest rate of 4% at the end of its time (4 years)- 3.62990 Present value of $1 at an interest rate of 10% at the end of its time (4 years)- .85480

1. $800 x 3.62990 = 2,903.92 2. $10,000 x.85480 = 8,548 3. Present value of the bond is $11451.92 4. Jan.1 Cash $11,451.92 Bonds payable 10,000 Premium on Bonds payable 1,451.92 To record the issuance of bonds payable Note if the present value was lower then there would be a discount on Bonds payable.

Chapter 9, Exercise 9-11 Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two-year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 100,000 dishwashers for $325 each. Analysis of past warranty records indicates that 12% of all sales will be returned for repair within the warranty period. Clean expects to incur expenditures of $14 to repair each dishwasher. The amount Estimated Liability for Warranties had a balance of $120,000 on January 1. Clean incurred $150,000 in actual expenditures during the year. 1. Prepare all journal entries necessary to record the events related to warranty transactions during the year. Determine the adjusted ending balance in the Estimated Liability for Warranties Account.

1. Cash 325,000 Sales. 325,000 (325 x $100,000) 12/31 Warranty Expense $168,000 Estimated liability for warranty $168,000 (100,000 units x 12%) x $14 6/11 Estimated Liability for Warranties 150,000 Cash. 150,000 Beginning Balance $120,000 Warranty Estimate $168,000 Actual Expense ($150,000) ===== Ending balance of $138,000

Exercise 9-7 On July 1, 2016, Jo's Flower Shop borrowed $25,000 from the bank. Jo signed a ten-month, 8% promissory note for the entire amount. Jo's uses a calendar year-end. Required 1. Prepare the journal entry on July 1 to record the issuance of the promissory note. 2. Prepare any adjusting entries need at year-end 3. Prepare the journal entry on May 1 to record the payment of principal and interest

1. July 1 Cash 25,000 Note Payable 25,000 2. Dec. 31 Interest Expense 1,000 Interest Payable 1,000 3. May. 1 Notes Payable 25,000 Interest Payable 1,000 Interest Expense 667 Cash 26,667

Chapter 9, Exercise 9-8 On October 1, 2016, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note. The bank discounted the note at 9%. 1. Prepare the journal entry needed to record the issuance of the note 2. Prepare the journal entry needed on December 31, 2016, to accrue interest 3. Prepare the journal entry to record the payment of the note on October 1, 2017 4.What effective rate of interest did Ratkowski pay?

1. October 1 2016. Cash $16,380 Discount on notes payable $1,620 Notes payable $18,000 2. Dec 31 2016. Interest Expense $405 Discount on notes payable $405 3. Oct 1 2017. Interest Expense $1,215 Note payable $18,000 Discount on notes payable $1,215 4.

What is an allowance for doubtful accounts? Asset? Liabilities...etc

Contra current asset

Chapter 9 The effective interest rate on a note.

Interest expense/total amount received

Journal Entry: Record buying the 18-month term note: then Record Interest on December 31 on a $300,000 Note with 8% interest. Bought on January 1.

Jan 1 2022. Cash $300,000 Note Payable $300,000 Dec 31 2022. Interest Expense 24,000 Interest Payable 24,000 July 1 2023. Note payable 300,000 Interest Payable 24,000 Interest Expense 12,000 Cash 336,000

Polly's sold 160 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 34% of the gift certificates had been redeemed. Journal Entries. On July 1 and December 31.

Jan 1. Cash $4,000 Unearned Sales Revenue 4,000 December 31. Unearned Sales Revenue $1,360 Sales 1,360

1. Purchased $10,000 of inventory on Account January 1st 2. Returned $500 of inventory due to damage January 10th

Jan.1 Purchases $10,000 Accounts Payable $10,000 Jan 10. Accounts Payable $500 Purchases Returns and Allowances $500

Is Purchases a expense or liability? What about purchases returns and allowances?

Purchases is an expense Purchases returns and allowances is a credit to the expense account

What are marketable securities? Asset? Liability... etc

current asset