Question

1. Whirlpool Corporation sells electric appliances, including automatic washing machines. Suppose that experience in recent years has indicated that warranty costs average 3.0% of sales. Sales of washing machines for April were $5.0 million. Cash disbursements and obligations for warranty service on washing machines during April totaled $144,000. Prepare the journal entries prompted by these facts. Omit explanations.
2. Pepsi-Cola Bottling Company of New York gets cash deposits for its returnable bottles. In November, it received $72,000 cash and disbursed $68,000 for bottles returned. Prepare the journal entries concerning the receipts and returns of deposits. Omit explanations.
3. Citibank received a $14,000 savings deposit on April 1. On June 30, it recognized interest thereon at an annual rate of 2%. On July 1, the depositor closed her account with the bank. Prepare the bank’s necessary journal entries. Omit explanations.
4. The Village Theater sold, for a total of $180,000 cash, 600 season tickets in advance of December 31 for six plays, each to be held in successive months, beginning in January.
a. What is the effect on the balance sheet of December 31? What is the appropriate journal entry for the sale of the tickets? Omit explanations.
b. What is the effect on the balance sheet of January 31? What is the related journal entry for January? Omit explanations.
5. Suppose a tabloid newspaper has lost a lawsuit. Damages were set at $500,000. The newspaper plans to appeal the decision to a higher court. The newspaper’s attorneys are 90% confident of a reversal of the lower court’s decision. What liability, if any, should be shown on the newspaper’s balance sheet?



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  • CreatedFebruary 20, 2015
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