Preparation of year-end entries of Classical Tool Makers Inc., | ||||||
Debit($) | Credit($) | Calculations | ||||
1 | Warranty expense | 80000 | 2000000*4% | |||
Cash | 30800 | |||||
Accrued warranty liability | 49200 | 80000-30800 | ||||
2 | Provision for Bad debts(Under expenses) | 40000 | ||||
Accounts receivable | 40000 | 2000000*2% | ||||
3 | Penalties(Under expenses) | 1500000 | ||||
Penalties Payable(Under liabilites) | 1500000 | |||||
(The financial statements are issued in April 2017 | ||||||
So before closing known liability even though after | ||||||
completion of the year need to take in the books. | ||||||
4 | No Journal Entry. Since there is no certainity about | |||||
winning the case cannot record in the books of accounts. | ||||||
5 | Product redesign expenses | 500000 | ||||
Accrured product redesign liability | 500000 | |||||
(Since the expense is unavoidable and knows that liability | ||||||
in Nov 2016 this liability need to be entered) | ||||||
6 | Promotional Expenses | 250000 | 10000*25 | |||
Cash | 105000 | |||||
Promotional expenses payable | 145000 | 250000-105000 | ||||
(As per the accrual concept of accounting book every known | ||||||
liability. Here the rebate is itself offered by classical tool makers | ||||||
Inc., and that amount need to be set side to pay off to the customers | ||||||
until the time limit for claiming expires) |
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in...
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2016. Classical's fiscal year ends on December 31. Financial statements are issued in April 2017. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 4% of sales. Sales were $2 million (all credit) for 2016. Actual warranty expenditures were $30,800 and were recorded as warranty expense when incurred. 2. Although no customer...
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021. Classical's fiscal year ends on December 31. Financial statements are issued in April 2022. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 3% of sales. Sales were $3.7 million (all credit) for 2021. Actual warranty expenditures were $49,400 and were recorded as warranty expense when incurred. 2. Although no customer...
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021. Classical's fiscal year ends on December 31. Financial statements are issued in April 2022. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 3% of sales. Sales were $2.8 million (all credit) for 2021. Actual warranty expenditures were $31,600 and were recorded as warranty expense when incurred. 2. Although no customer...
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2018. Classical's fiscal year ends on December 31. Financial statements are issued in April 2019. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 4 % of sales. Sales were $2.7 million (all credit) for 2018. Actual warranty expenditures were $43,500 and were recorded as warranty expense when incurred. 2. Although no customer accounts...
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021. Classical’s fiscal year ends on December 31. Financial statements are issued in April 2022. Classical’s products carry a one-year warranty against manufacturer’s defects. Based on previous experience, warranty costs are expected to approximate 2% of sales. Sales were $3.3 million (all credit) for 2021. Actual warranty expenditures were $22,800 and were recorded as warranty expense when incurred. Although no customer accounts have...
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021. Classical's fiscal year ends on December 31. Financial statements are issued in April 2022. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 3% of sales. Sales were $2.3 million (all credit) for 2021. Actual warranty expenditures were $20,100 and were recorded as warranty expense when incurred. 2. Although no customer...
ctice Exercises Chapter 13 The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021. Classical's fiscal year ends on December 31. Financial statements are issued in April 2022 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 4% of sales. Sales were $2 million (all credit) for 2021. Actual warranty expenditures were $30,800 and were recorded as warranty expense when incurred....
Chapter 13 i Seved B The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021. Classica's fiscal year ends on December 31. Financial statements are issued in April 2022. Jok int ences 1. Classical's products carry a one year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 4% of sales. Sales were $2.5 million (all credit) for 2021. Actual warranty expenditures were $40,000 and were recorded...
PLEASE PUT SOLUTION IN THE SAME FORMAT AS THE IMAGE. THANK YOU! Exercise 13-20 (Algo) Various transactions involving contingencles (LO13-5, 13-6) The following selected transactions relate to contingencles of Classical Tool Makers, Inc., which began operations In July 2021. Classical's fiscal year ends on December 31. Financial statements are issued in April 2022 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 3% of sales. Sales were $2.3 million...
Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2018 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 40% in all years. Any tax effects should be adjusted through the deferred tax liability account. a. Fleming Home Products Introduced a new line of commercial awnings in 2017 that carry a one-year warranty against manufacturer's defects. Based on industry experience, warranty costs were expected to approximate...