Demas Taufik Suganda_Kieso Ch 13

E13-18

1. Liability for stamp redemptions, 12/31/09.............................. $13,000,000

Cost of redemptions redeemed in 2010.................................. (6,000,000)
7,000,000
Cost of redemptions to be redeemed in 2011 (5,200,000 X
80%)................................................................... 4,160,000
Liability for stamp redemptions, 12/31/10.............................. $11,160,000

2. Total coupons issued ................................................................... $850,000

Redemption rate............................................................................. X 60%
To be redeemed.............................................................................. 510,000
Handling charges ($510,000 X 10%) ........................................ 51,000
Total cost.......................................................................................... $561,000
Total cost.......................................................................................... $561,000
Total payments to retailers......................................................... (330,000)
Liability for unredeemed coupons ........................................... $231,000
3. Boxes ..............................................................................................600,000
Redemption rate.............................................................................X 70%
Total redeemable............................................................................420,000
Coupons to be redeemed (420,000 – 250,000)...................... ………170,000
Cost ($6.50 – $4.00) ....................................................................... X $2.50
Liability for unredeemed coupons ........................................... ……$425,000
ANSWER P 13-1
(a) February 2
Purchases ($70,000 X 98%) ........................................... 68,60
Accounts Payable ................................................. 68,600
February 26
Accounts Payable............................................................. 68,600
Purchase Discounts Lost............................................... 1,400
…………..Cash......................................................................................... 70,000
April 1
Trucks................................................................................... 50,000
…………..Cash........................................................................... 4,000
Notes Payable......................................................... 46,000
August 1
Retained Earnings (Dividends Declared).................. 300,000
Dividends Payable ................................................ 300,000
September 10
Dividends Payable............................................................ 300,000
…………….Cash........................................................................... 300,000
(b) December 31
1. No adjustment necessary

2. Interest Expense ($46,000 X 12% X 9/12)............ 4,140

Interest Payable ..................................................... 4,140
3. No adjustment necessary
Answer P 13-5
a. Cash 1.000.000
Sales 1.000.000
b. Cash 1.000.000
Sales 1.000.000

Warranty Expense 136.000

Warranty Liability 136.000

c. No liability would be disclosed under the cash-basis method relative to future cost due to
warranties on past sales
d. Current Liabilities:
Warranty Liability 68.000

Longterm Liabilities:

Warranty Liability 68.000

e. Warranty Expense 61.300

Parts Inventory 21.400
Accrued Payroll 39.900
f. Warranty Liability 61.300

Parts Inventory 21.400

Accrued payroll 39.900

Answer P13-6

(a) Cash .................................................................................... 294,300

Sales (300 X $900)....................................................................... 270,000
Unearned Warranty Revenue (270 X $90).................................. 24,300
(b) Current Liabilities:
Unearned Warranty Revenue ($24,300/3)............................................... 8,100
(Note: Warranty costs assumed to be incurred equally over the threeyear period)

Non-current Liabilities:
Unearned Warranty Revenue ($24,300 X 2/3)...........................................16,200
(c) Unearned Warranty Revenue...................................... 8,100
Warranty Revenue .................................................... 8,100
Warranty Expense .......................................................... 6,000
Parts Inventory............................................................ 2,000
Accrued Payroll ........................................................... 4,000
(d) Current Liabilities:

Unearned Warranty Revenue ........................... $ 8,100

Non-current Liabilities:

Unearned Warranty Revenue ........................... $ 8,100

 Answer P13-8

Inventory of Premium Puppets 60.000

Cash 60.000

Cash 1800.000

Sales 1.800.000

Premium Expense 34.500

Inventory of Premium Puppets 34.500

Premium Expense 23.100

Premium Liability 23.100

Computation: Total coupons issued in 2011 480.000

Total estimated redeemed in 2011 (115.000)

Estimated future redemptions 77.000

Cost of estimated claims outstanding (77.000/5) X 1.50 = 23.100