BE10: 5,6,7,8,9,14,15

B5
In this exercise, we are to journalize Garcia Corporation's purchase of truck through the issuance of note payable.

Property, Plant, and Equipment (PPE) refers to the tangible long-term assets held by an entity for use in the produ

To start with, let us provide the given values in the problem:

Given
Principle 80,000
Terms 4 years
Stated rate 0%
Market rate 10%
PVF of 1 at 10% 4 periods 0.683

Now, determine the present value of the note payable.

Present value of Note Payable = Principal x PV Factor = 80000 x 0.6830 = 54640

The discount on notes payable is the excess of the principal amount and the present value of notes payable. It is com
Discount on Note Payable = Principal x PV of Note Payable = 80000 - 54640 = 25360

The journal entry to record the purchase of truck would be:

Date Particulars Debit ($) Credit ($)
Truck 54640
Discount on Notes Payable 25360
Notes Payable 80000
To record the purchase of a truck

B6
For this exercise, we are to allocate the purchase price based on the asset's relative fair value.

Property, Plant, and Equipment (PPE) refers to the tangible long-term assets held by an entity for use in the produ

Mohave Inc. purchased PPE by paying a lump-sum price of $315,000. Now, let us provide the given fair values of ea
Fair Value ($)
Land 60000
Building 220000
Equipment 80000
Total 360000

We have to allocate the lump-sum purchase price of $315,000 based on the relative fair values.
Land:
Land = Lump-Sum x (Fair Value of Land / Total Fair Value)
315000 x 60000 / 360000 52500
Therefore, the land should be recorded at $52,500.

Building:
Building = Lump-Sum x (Fair Value of Building / Total Fair Value)
315000 x 220000 / 360000 192500
Therefore, the building should be recorded at $192,500.

Equipment:
Equipment = Lump-Sum x (Fair Value of Equipment / Total Fair Value)
315000 x 80000 / 360000 70000
Therefore, the equipment should be recorded at $70,000.

The purchase price of $315,000 is allocated as follows

Land 52500
Add: Building 192500
Equipment 70000
Total 315000

B7
For this exercise, we are to journalize Fielder Company's acquisition of land by the issuance of shares.

Property, Plant, and Equipment (PPE) refers to the tangible long-term assets held by an entity for use in the produ

When a company acquires a property, plant, and equipment (PPE) through the issuance of shares, the valuation to be

Let us provide the given values in the problem:

Given
Number of shares 2000 shares
Par value $10 per share
Fair value $40 per share
Appraised value of land 8500000%

The land is acquired through the issuance of common stock. Hence, it must be valued at the fair value of the stock.
Land = Number of Shares x Fair Value per share
2000 x 40 80000

The common stock issued must be measured at par value.

Common Stock = Number of Shares x Par Value per Share
2000 x 10 20000
Any excess between the value of land and common stock issued must be credited to Paid-in Capital in Excess of Pa
Paid-in Capital = Land - Common Stock
80000 - 20000 60000

The journal entry would be:

Date Particulars Debit ($) Credit ($)
Land 80000
Common Stock 20000
Paid-in Capital 60000
To record the purchase of land by issuing stocks

B8
For this exercise, we are required to journalize Navajo Corporation's exchange of a truck for a small computer, with a

Property, Plant, and Equipment (PPE) refers to the tangible long-term assets held by an entity for use in the produ

Commercial Substance: the exchange has commercial substance if the cash flow will be significantly different as a r

Now, let us provide the given values in the problem:

Given Amounts ($)
Cost of used truck 20000
Accumulated Depreciation - used truck 18000
Fair value of computer 3300
Cash paid by Navajo 500

Given that Navajo Corporation exchanged a used truck for a small computer, and the exchange has commercial subst
Date Particulars Debit ($) Credit ($)
Computer 3300
Accumulated Depreciation 18000
Truck 20000
Cash 500
Gain on Disposal of Truck 800
To record the exchange of used truck

Explanation:

The computer received must be valued at the fair market value of the PPE received, in the absence of the market price
The accumulated depreciation must be removed from the books. Thus, debit accumulated depreciation of $18,000.
The truck must also be removed from the books. Hence, credit truck for its cost of $20,000.
Cash paid by Navajo must be credited by $500.

The exchange of a used truck for a small computer will result to:
Fair Value of Computer 3300
Less Cost of used truck 20000
Accumulated Depreciation -18000
Cash Paid 500 -2500
Gain on Disposal 800
Therefore, the exchange resulted in a gain on the disposal of $800.

B9
For this exercise, we are required to journalize Navajo Corporation's exchange of a truck for a small computer, withou

Property, Plant, and Equipment (PPE) refers to the tangible long-term assets held by an entity for use in the produ

Without Commercial Substance: the exchange has no commercial substance if the result of the exchange will not si

Now, let us provide the given values in the problem

Given Amounts ($)
Cost of used truck 20000
Accumulated Depreciation - used truck 18000
Fair value of computer 3300
Cash paid by Navajo 500

Now, let us determine the value of the computer received.

Cost of used truck 20000
Less Accumulated Depreciation -18000
Book Value of truck 2000
Add Cash Paid 500
Computer 2500

Therefore, the cost of the computer received must be recorded as $2,500.

Given that Navajo Corporation exchanged a used truck for a small computer, and the exchange lacks commercial sub
Date Particulars Debit ($) Credit ($)
Computer 2500
Accumulated Depreciation 18000
Truck 20000
Cash 500
To record the exchange of used truck

Explanation:

The computer received must be valued at the book value of used truck plus any cash paid.
The accumulated depreciation must be removed from the books. Thus, debit accumulated depreciation of $18,000.
The truck must also be removed from the books. Hence, credit truck for its cost of $20,000.
Cash paid of Navajo must be credited by $500.
B14

The book value (carrying amount) of the machinery (as of Dec. 31, 2017) is $11,600. Cost of machinery, $20,000 les

Depreciation is computed by 8/12 mos. multiply by $2,400 equals $1,600.

The $1,600 depreciation is added to accumulated depreciation. (total accumulated depreciation is $10,000) The comp

The book value of the machinery (as of Sept. 1, 2018) is $10,000. but it is sold for $10,500. The selling price is highe

Date Account Title Debit ($)

Sept. 1, 2018 Depreciation expense 1600
Accumulated Depreciation
*Under depreciation for 2018

Sept. 1, 2018 Cash 10500

Accumulated Depreciation 10000
Machinery
Gain on Disposal of Machinery
*Sale of machinery worth 10500

B15

The book value (carrying amount) of the machinery (as of Dec. 31, 2017) is $11,600. Cost of machinery, $20,000 les

Depreciation is computed by 8/12 mos. multiply by $2,400 equals $1,600.

The $1,600 depreciation is added to accumulated depreciation. (total accumulated depreciation is $10,000) The comp

The book value of the machinery (as of Sept. 1, 2018) is $10,000. But it is sold for $5,200. The selling price is lower

Date Account Title Debit ($)

Sept. 1, 2018 Depreciation expense 1600
Accumulated Depreciation
*Under depreciation for 2018

Sept. 1, 2018 Cash 5200

Accumulated Depreciation 10000
Loss on Disposal of Machinery 4800
Machinery
*Sale of machinery worth 10500
nce of note payable.

ntity for use in the production or supply of goods and services, for rental to others, or for administrative purposes.

f notes payable. It is computed as follows:

ntity for use in the production or supply of goods and services, for rental to others, or for administrative purposes.

e given fair values of each asset acquired.

ntity for use in the production or supply of goods and services, for rental to others, or for administrative purposes.

ares, the valuation to be used is the fair market value of the stock. However, if the company cannot identify the fair market val

air value of the stock.

Capital in Excess of Par—Common Stock or Share Premium. Alternative computation can be fair value per share less par va

a small computer, with a commercial substance.

ntity for use in the production or supply of goods and services, for rental to others, or for administrative purposes.

nificantly different as a result of the exchange.

ge has commercial substance, the journal entry would include:

sence of the market price of the used truck exchanged.

preciation of $18,000.
a small computer, without commercial substance.

ntity for use in the production or supply of goods and services, for rental to others, or for administrative purposes.

the exchange will not significantly affect the cash flow.

ge lacks commercial substance, the journal entry would include:

preciation of $18,000.
 machinery, $20,000 less accumulated depreciation of $8,400

n is $10,000) The computed carrying amount of machinery (as of Sept. 1, 2018) is $10,000. ($20,000 -$10,000)

The selling price is higher than the book value. Hence, The gain on disposal of machinery arises worth $500. ($10,500 - $10,000)

Credit ($)

1600

20000
500

machinery, $20,000 less accumulated depreciation of $8,400.

n is $10,000) The computed book value of machinery (as of Sept. 1, 2018) is $10,000. ($20,000 -$10,000)

he selling price is lower than the book value. Hence, The loss on disposal of machinery loss on disposal of machinery arises wo

Credit ($)

1600

20000
e purposes.

e purposes.
e purposes.

identify the fair market value of the stock, the market value of the property must then be used.
value per share less par value will also give the same amount of paid-in capital.

e purposes.
e purposes.
 $500. ($10,500 - $10,000)

osal of machinery arises worth $4,800. ($5,200 - $10,000)

BE11: 1,2,3,4,5,10 E11: 1,2,3,4

BE1
Given
Cost of the truck = 50,000
Salvage value = 2,000
Estimated useful life = 160,000 miles
Actual usage in 2020 = 23,000 miles
Actual usage in 2021 = 31,000 miles
2020
Depreciation for 2020 = (Cost - Salvage value) / Estimated useful life x Actual usage
50k -2k / 160k x 23k = 6900
2021
Depreciation for 2021 = (Cost - Salvage value) / Estimated useful life x Actual usage
50k - 2k / 160k x 31k = 9300

BE2
a Depreciation = Cost - Salvage value / Estimated useful life
80k - 8k / 8y = 9000

b Depreciation = Cost - Salvage value / Estimated useful life

80k -8k / 8y = 9000
9000 x 4/12 (purchased Sept. 1)

BE3
Given
Cost of the machinery = 80,000
Salvage value = 8000
Useful life = 8y
Sum-of-the-years'-digit = n(n+1)/2 = 36

a Depreciation = Depreciable base x Remaining life / SYD

(80k - 8k) x 8 / 36
16,000

b Depreciation = Depreciable base x Remaining life / SYD

(80k - 8k) x 8 / 36
16,000 x 9 / 12 (purchased April 1)
12,000

BE4
Given
Cost of the machinery = 80,000
 Salvage value = 8000
Useful life = 8y
Double-declining-balance depreciation rate = 1/Useful life x 200% = 1/8 x 200% = 25%

a Depreciation = Cost x Depreciation rate

80,000 x 25% = 20,000

b Depreciation = Cost x Depreciation rate

80,000 x 25% = 20,000
20,000 x 3/12
5,000

Note:

Ignore the salvage value if the double-declining-balance method is used.

Prorate the annual depreciation by 3/12 since the machinery was purchased in October. (for requirement B)

BE5

Purchase price $28,000

Title fees $200

Propert tax $125

Shipping charges $500

Local contractor $475

Total cost $29,300

Less: Salvage value $3,000

Depreciable base $26,300 ​

Note: In computing the cost of the machine, other costs incurred that are necessary to bring the asset in its useful cond

BE10

Given:
Total assets, beginning = $8,113 million

Total assets, ending = $8,323 million

Total sales = $8, 286 million

Net income = $807 million

A. Asset turnover = Net sales / Average total assets

B. Profit margin on sales = Net income / Total sales
C. Returns on assets
1. Using asset turnover and profit margin
AxB
2. Using net income
Net income / Average total assets

E3
E2
E1
E2
E3
E4
r requirement B)

g the asset in its useful condition are also considered.

BE12: 1-13
E12.1/2/4/7/8
E2/4/7/8 XEM VỞ
BE1
Amortization Expense for defending the patent suit in 2019 = (Carrying value of patent recorded o
Carrying value of patent = 54,000 - 2x5,400 = 43,200

Patents 54,000
Cash
(Being patents purchased by Salmon Co.)
Amortization expense 5,400
Patents
(Being yearly amortization recorded)

BE2

Patents 24,000
Cash
(Being patents purchased by cash)
Amortization expense 8,400
Patents
(Being amortization made on patents)

Amortization = (CA of Patents + Defending cost) x 1/8 = (43,200 + 24,000) x 1/8

BE3
Stephan Curry Inc.
Date Description Debit Credit
01/01/X Trade Name 68,000
Cash 68,000
31/12/X Amortization Expense 8,500
Patent 8,500
Amortization Expense will be equal to the yearly amortization, being the asset value ( 68,000 ) divided by the estimat

BE4
Gershwin Corporation
Date Description Debit Credit
1/4/2020 Franchise 120,000
Cash 120,000
31/12/2020 Amortization Expense 11,250
Franchise 11,250

Amortization Expense will be calculated as below

 Description Amount
Intangible Asset 120,000
Years of amortization 8
Yearly Amortization 15000
Monthly Amortization 1250

Amortization for 9 months

11,250

BE5

The amount of goodwill acquired by Winians, which is the difference between the
purchase price and net fair value of identifiable assets, is calculated as following:

Description Amount
Purchase Price 8700000
Net identifiable Assets 8600000
Assets 800000
Liabilities -200000
Goodwill 100000

BE6
BE7
Given:
Carrying amount of goodwill 400,000
Carrying amount of net assets, including goodwill 800,000
Fair value of net assets 1,000,000

Required: Amount of impairment of goodwill

Before recognizing any impairment losses on goodwill, a two-step test needs to be passed
1) The carrying amount of the unit, including goodwill, should exceed the fair value of the unit
2) The carrying amount of the goodwill should be greater than the fair value of the goodwill
Perform the tests
1) Compare carrying amount of the unit including goodwill to the fair value of the unit

The first step was not passed, thus no impairment will be recorded

BE8
Given:
Carrying amount of goodwill 400000
Carrying amount of net assets, including goodwill 800000
Fair value of net assets 750000
Implied amount (fair value) of goodwill 350000

Required: Amount of impairment of goodwill

Before recognizing any impairment losses on goodwill, a two-step test needs to be passed
1) The carrying amount of the unit, including goodwill, should exceed the fair value of the unit
2) The carrying amount of the goodwill should be greater than the implied or fair value of the goodwill

Perform the tests

1) Compare carrying amount of the unit including goodwill to the fair value of the unit

2) Compare carrying amount of goodwill to the implied or fair value of goodwill

Both tests have been passed, thus, goodwill is impaired

Compute for the amount of impairment

Carrying amount of goodwill 400000
Less Implied value of goodwill 350000
Impairment loss 50000

BE9
Nieland Industries had recorded a patent with book value $ 288000, the research and development costs incurred wi
be capitalized, however the legal fees incurred ($ 85000) will be capitalized. Thus the patent value will be changing
follows, based on monthly amortization and capitalized costs.

Date Nieland Industries

Description Amount
1/1/2017 Patent 288000
Useful life 8 years (96 months)
Amortization for 11 months -33000 288000 x 11/96 (representing months passed / re
1/12/2017 Remaining value of patent 255000
Legal fees incurred for paten 85000
Total patent value 340000
 31/12/2017 Amortization for 1 months -4000 340000 x 1/85 (representing 1 month / remaining
Final patent value

On December 31st, 2017 Nieland Industries will report 336000 as patent on its balance sheet

BE10
The first copyright developed in-house at a cost of $$ 9 900 estimated useful life 3years will be expensed in 2017 and
On the other hand, the second copyright purchased by $24000, has an indefinite useful life, will be reported as intang

BE11
The journal entries for R.Wilson Corporations will be as following
R.Wilson Corporations
Date
Description Debit Credit
31/12/2020 Startup cost expense 60,000
Cash 60,000

BE12
The journal entries for Treasure Land Corporation will be as following
Treasure Land Corporation
Date
Description Debit Credit
31/12/2020 R&D Expense 430000
Cash 430000

BE13
a) Purchase cost of a patent from a competitor => Capitalizable cost (page 672) => Capitalized
b) Research and development costs are generally expensed (page 682) => Expensed
c) Organization costs are expensed. This is a requirement since determining the timing of benefits is complex where t
d) Cost incurred internally to create goodwill are expensed. The process of measuring internally generated goodwill is

E1 Classification Issues - Intangibles

A) Items classified as intangible assets are as follows:
Purchase cost of a franchise
Goodwill acquired in the purchase of a business
Cost of purchasing a patent from an inventor
Legal costs incurred in securing a patent
Unrecovered costs of a successful legal suit to protect the patent
Cost of purchasing a copyright
Cost of purchasing a trademark

B)
1. Investment in a subsidiary company => Investments (SoFP)
2. Timberland => PPE (SoFP)
3. Cost of engineering activity required to advance the design of a product to the manufacturing stage => R&D Expen
4. Lease prepayment (6 months' rent paid in advance) => Prepayment under current assets (SoFP)
5. Cost of equipment obtained => PP&E (SoFP)
6. Cost of searching for applications of new research findings => R&D costs (Income Statement)
7. Costs incurred in the formation of a corporation => Organization costs (Income Statement)
8. Operating losses incurred in the start-up off a business => Operating losses (Income Statement)
9. Training costs incurred in start-up of new operation => Organization costs (Income Statement)
11. Goodwill generated internally => Expenses (Income Statement)
12. Cost of testing in search for product alternatives => R&D cost (Income Statement)
14. Cost of developing a patent => R&D cost (Income Statement)
18. Cost of conceptual formulation of possible product alternatives => R&D cost (Income Statement)
20. Research and development cost => R&D cost (Income Statement)
21. Long-term receivables => Investments (SoFP)
22. Cost of developing a trademark => R&D cost (Income Statement)
lue of patent recorded on Jan 1, 2020 + price of defending suit) / Remaining useful life
Remaining useful life = 10 - 2 = 8 years

54,000

5,400

24,000

8,400

) divided by the estimated years of amortization (8)

 800000 < 1000000

800000 > 750000 Passed

400000 > 350000 Passed

pment costs incurred will not

t value will be changing as it

nting months passed / remaining months of valuable patent)

 ting 1 month / remaining months)

be expensed in 2017 and as such will not be reported on the balance sheet.
will be reported as intangible assets on the balance sheet and will not be amortized

nefits is complex where the benefits outweigh the costs. Thus, these are expensed. (page 683) => Expensed
lly generated goodwill is complex where the benefits outweigh the costs (page 674) => Expensed

ng stage => R&D Expense (Income Statement)

E 13.9, P 13.7, P 13.8, P 13.10
E3/5/7/9 XEM VỞ
E13.9

At the end of the year 2017, Kate Holmes Company has $7,000,000 short-term notes payable to Gotham state ba
refinancing contract with Gotham that allows the entity to borrow 60% of the gross amount of accounts receivable. T
interest rate is 15% and the new agreement is

The following is the partial balance sheet of the entity:

Kate Holmes Company
Partial Statement of financial position
For the year ended Dec 31,2017

Current Liabilities
Notes Payable (Note1)
Non-Current Liabilities
Notes Payable (refinanced in 2018) (Note 1)

Note1
Notes Payable

The entity enter into agreement to refinanced the notes payable with Gotham State Bank.the entity to borrow 60%
agreement is 1% higher than prime rates in 2022. The Kate Holmes Company issue a notes that will mature in the y
borrowed is $3,600,000 only. The amount is base on the the expected receivable ranges from $6,000,000 in May to $
$7,000,000, the refinanced amount to long term

P13.7

Alvaro Company is engage in selling machines with selling price of $7,400 each with attached 12-month warranty, w
year 2017, the entity sold 600 units of machines. Warranty expense incurred in half of 2017 and half of 2018. The

Requirement A

The sale of machinery is computed as follows

Description Amount
Units sold 600 units
Multiply by: selling price x $7,400
Total sales $4,440,000

The entity should make a journal entry of

Account title Debit Credit
Cash $4,440,000
Sales $4,440,000

Next compute the wages and salaries payable

Description Amount
Units sold 600 units
Multiply by: labor cost x $220
Total wages and salaries $132,000
Multiply by: x 6/12 months
Wages and salaries for 2017 $66,000

Then compute the cost for inventory parts

Description Amount
Units sold 600 units
Multiply by: cost of parts x $170
Total cost of inventory parts $102,000
Multiply by: x 6/12 months
Cost of inventory part for 2017 $51,000

For warranty expense

Description Amount
Total wages and salaries $66,000
Total cost of inventory parts $51,000
Total warranty expense for 2017 $117,000

The journal entry for the 2017 warranty expense is

Account title Debit Credit
Warranty expense $117,000
Inventory parts $51,000
Wages and salaries payable $66,000

Requirement B
The entry for warranty accrual is:
Account title Debit Credit
Warranty expense $117,000
Warranty payable $117,000

Requirement C
The warranty expense are equally distributed to the half of 2017 and 2018. Hence the cost of inventory parts and the w

The journal entry for the 2018 warranty expense is:

Account title Debit Credit
Warranty expense $117,000
Inventory parts $51,000
Wages and salaries payable $66,000

Requirement D
The amount that will be disclose in the statement of financial position as of December 31, 2017 of the company about

P13.8
DATE DESCRIPTION DEBIT CREDIT

2018 Inventory of premiums 60,000

Cash 60,000
To record purchase of premiums

Cash 1,800,000
Sales 1,800,000
To record sales

Premium expense 57,600

Premium liability 57,600
To record accrual of premiums

Premium liability 34,500

Inventory of premiums 34,500
To record actual premium costs

Computations:
Inventory of premiums = 40,000 x 1.50 = 60,000
Sales = 480,000 x 3.75 = 1,800,000
Premium expense = (480,000 / 5) x 40% x 1.50 = 57,600

P13.10

A.)

The loss on the lawsuit is probable, and its amount can be reasonably estimated;
therefore, it should be recorded. Moreover, the event happened before the
issuance of the financial statements, that is why the adjustment is recorded as a
loss and liability.

DATE DESCRIPTION DEBIT CREDIT

2017 Loss on lawsuit 5,400,000

Lawsuit liability 5,400,000
To record the provision for loss on lawsuit
Notes: The estimated loss of 5,400,000 is based on the estimate of the legal
counsel, 60% of the 9,000,000 estimated damages. This is due to the accident
on November 24,2017, where 36 passengers of Windsor Airlines flight no. 901
were injured upon landing.

B.)

GAAP prohibits the recording of liability for the future expected loss. The lack
of insurance shouldn't be recorded because it does not result in an obligation.
For liability to be recorded, the loss should be probable and can be reasonably
estimated. Further, the occurrence of an event must happen before the issuance
of the financial statements.

P13.14

In this exercise, we will use two possible scenarios to calculate the amount that will be listed on the balance sheet as o

What is a warranty?

Upon the purchase of a product, the seller provides the consumer with
a warranty that has a time frame within which it may be used. As a commitment
given by a seller to a buyer to make good on a failure in quantity, quality, or
performance of a product, this warranty is a current liability on the side of the
seller.

Presented below are the sales revenue, warranty expenditures and the percentage
of the estimated warranty costs during 2019,2020, and 2021.

Year Sales revenues Warranty expense Est. Warranty (%)

2019 800,000 6,500 2%
2020 1,100,000 17,200 3%
2021 1,200,000 62,000 5%

Since we will be computing the warranty liability on December 31,

2021. The total estimated warranty costs based on percentage is shown
below:

Estimated warrant costs in percentage = 2% + 3% + 5% = 10%

As a result, we will use 10% as the expected warranty cost percentage when
calculating the total estimated warranty cost
Let's compute now the estimated warranty cost for each year based on the percentage we have just computed.

2019 2020 2021

Sales Revenue 800,000 1,100,000 1,200,000
Estimated warranty cost in % 10% 10% 10%
Total estimated warranty costs 80000 110000 120000

Now, let's compute the total estimated warranty cost:

Est. warranty cost - 2019 80,000

Est. warranty cost - 2020 110,000
Est. warranty cost - 2021 120,000
Total estimated warranty cost 310,000

Next is the computation of the warranty expenditures

Warranty expenditure - 2019 6,500

Warranty expenditure - 2020 17,200
Warranty expenditure - 2021 62,000
Total warranty expenditures 85,700
 After determining the total estimated warranty costs and total warranty
expenditures, we can calculate the warranty liability by subtracting the warranty
expenditures from the estimated warranty costs.

Estimated warranty cost 310,000

Less: Warranty expenditure 85,700
Warranty liability 224,300

Therefore, the warranty liability that should be reported on December 31,2021 is 224,300

REQUIREMENTS2
Before we proceed with answering the question, let's discuss first what are
premiums.
Companies provide premiums to their customers in the form of rebates,
discounts, loyalty points, coupons, and other incentives to increase sales.
Companies that provide these estimate the amount to be recognized as a
liability at the end of the accounting period

Let's have a quick discussion of the scenario given in the problem.

 On December 31, 2020, the company has a $9,000 liability for
unredeemed coupons. For previous experiences, 40% of the coupons
were redeemed. In 2021, coupons worth up to $30,000 were
distributed, and the merchandise to be redeemed is worth $8,000.

Let us first compute the liability for coupons incurred during 2021. Since
$30,000 in coupons were issued, and the estimated percentage of
coupons redeemed is 40%, the additional coupons incurred in 2021 is:

Liability for coupons during 2021 = 30,000 x 40% = 12,000

There was a $9,000 balance of liability at the start of 2021 from 2020, and
$8,000 merchandise was distributed in exchange for coupons redeemed during
2021. With these data, we can compute now the libaility.

Unredeemed coupons, beginning balance 9,000

Liability for coupons during 2021 12,000
Less: Coupon redeemed 8,000
Liability for coupons 13,000

Therefore, the liability in reletion to coupons that should be reported in the

balance sheet as of December 31,2021 is $13,000.
m notes payable to Gotham state bank. The notes payable will mature in the year 2018. On January 28, 2018, Holmes Company e
ss amount of accounts receivable. The expected receivable is ranges from $6,000,000 in May to $8,000,000 in October for the ye
e is 15% and the new agreement is 1% higher than prime rates in 2022.

$3,400,000

$3,600,000

tate Bank.the entity to borrow 60% of the gross amount of accounts receivable. The interest rate is 15% and the new
sue a notes that will mature in the year 2022. The entity intends to replace the $3,600,00 notes. The amount that can be
nges from $6,000,000 in May to $8,000,000 in October for the year 2018. Hence the amount that will be long-term from
the refinanced amount to long term is $3,600,000.

with attached 12-month warranty, where the company will replace all defective parts and will pay the labor cost. For the
half of 2017 and half of 2018. The parts is costing $170 and the $220 for labor cost. With total warranty cost of $390.
he cost of inventory parts and the wages and salaries cost are the same with the year 2017.
ber 31, 2017 of the company about future cost of warranty is the amount of warranty liability amounting to $117,000 as part of c
l be listed on the balance sheet as of December 31,2021
ntage we have just computed.
28, 2018, Holmes Company enter into
000,000 in October for the year 2018. The

15% and the new

amount that can be
ill be long-term from

e labor cost. For the

anty cost of $390.
nting to $117,000 as part of current liabilities.
E 14.1/4/5/12/19, P 14.1, P 14.4

E14.5
Bond payable can be defined as the securities that are issued by the business to creditors for generating cash. It is repo
Issuance of the bonds

DATE DESCRIPTION DEBIT CREDIT

2020
1-Jan Cash 612,000
Premium on Bonds Payable 12,000
Bonds Payable 600,000
To record the issue of bonds on premium

Cash: 600,000 x 1.02

Premium on Bonds Payable is the difference between the actual cash and the face value of the issued bonds

Payment of interest and related amortization

DATE DESCRIPTION DEBIT CREDIT
2020
1-Jul Interest expenses $29,898
Premium on bonds payable $102
Cash $30,000
To record the payment of interest and
amortization of premium

Calculation of premium amortized

Particular Amount
Interest 9.7705% on the book value of bonds payable
(612,000 x 9.7705% x 1/2) 29,898

Interest 10% on bonds payable

(600,000 x 10% x 1/2) -30,000

Amortization of premium 102

Accrual of interest

DATE ACCOUNTS and EXPLANATION DEBIT CREDIT

31-Dec Interest expenses 29,893
Premium on bond payable 107
 Interest payable 30,000
(To record the accrual of interest)

Particular Amount
Interest 9.7705% on the book value of bond payable
(612,000 - 102) x 9.7705% x 1/2 29,893

Interest 10% on bond payable

(600,000 x 10% x 1/2) -30,000

Amortization of premium 107

E14.19 XEM VỞ

P14.1 XEM VỞ

P14.4

DATE DESCRIPTION DEBIT CREDIT

2020
Dec. 18 Cash 4,080,000
Premium on Bonds Payable 80,000
Bonds Payable 4,000,000

2021
Jan. 2 Bonds Payable 3,000,000
Loss on Redemption on Bonds 180,000
Discount on Bonds Payable 60,000
Cash 3,120,000
To record the redemption of the 9% bonds

Notes:
Dec.18, 2020
Cash $4,000,000 x 1.02
Discount on Bonds Payable $150,000 x 10/25

Jan. 2, 2021
Cash $3,000,000 x 1.04
Loss on Redemption $3,120,000 less 2,940,000

a The journal entry and computation are presented in the explanation cells.
b The loss on the redemption shall be reported as an ordinary loss in the company's Income Statement
E14.12
generating cash. It is reported as the non-current liability of the business entity.

the issued bonds

Income Statement
E: 1,2,6,8,23,24
P: 2->8

effective interest rate method => bài kiểm tra

p13.14

Tính EPS LỢI NHUẬN (cho sẵn) chia cho số lượng cổ phần
Tính DEPS
nếu chỉ số lợi nhuận convertible debts + defeered stock < basic EPS thì DPS
nếu cộng cả vào nhỏ hơn thì loại ra
 impli men tồ = ( tổng convert nhân lãi suất nhân tỉ lệ - thuế ) / số lượng

EPS=1
Convertible debts = 2
Convertible stock = 1.5

tính basic bnh

tính convertible ảnh hưởng bnh
convertible debts bao nhiêu
thấp hơn thì dilutive
lớn hơn thì loại bỏ (không tính vào)

Tính amount weighted average

discount term có thỏa mãn ko ? Điều kiện đủ nhưng mãi về sau mới trả tiền thì sẽ k thỏa mãn di
 giống bài ktra

k < basic EPS thì DPS

 thuế ) / số lượng

mới trả tiền thì sẽ k thỏa mãn discount

E: 2,6,7,11
P: 5