Financial Accounting

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Chapter 9 Homework

QUESTION 1.
Clean Out Clutter is located in a state where the sales tax is 7 1/4%. Total sales for the month of February were $104,000, all of which were subject to sales tax. a. Prepare a journal entry that summarizes sales (all in cash) for the month.

b. Prepare a journal entry regarding the disbursement for the sales tax.

QUESTION 2.
At the beginning of 20X3, Shingles Roofing had a liability for warranties of $7,000 on the books. During 20X3, Shingles Roofing had sales of $310,000. The company estimates that the cost of servicing products under warranty will average 2.5% of sales. Expenditures (all in cash) to satisfy warranty claims during 20X3 were $6,200, of which $2,500 was for products sold in 20X3. a. Prepare the journal entries for sales revenue and the related warranty expense for 20X3. Assume all sales are for cash.

b. Prepare the journal entry for the warranty expenditures.

c. Compute the December 31, 20X3, ending balance in the Liability for Warranties account.

QUESTION 3.

Nunn Industries had the following items on its December 31, 20X3, balance sheet: Cash and cash equivalents $56,230 Accounts payable 96,640 Inventories 60,790 Additional paid-in capital 51,690 Accrued liabilities and expenses 94,100 Payments due within 1 year on long-term debt 35,380 Short-term debt 39,030 Long-term debt 97,290
Required:
Prepare the current liabilities section of Nunn Industries' balance sheet.

QUESTION 4.
Parmlee Inc. has several assets and liabilities on its balance sheet. For each of the items below, decide whether it is a current asset (CA), current liability (CL), long-term asset (LTA), long-term liability(LTL), or contra-liability (COL).

CA/CL/LTA/LTL/COL a. 15 year lease obligation a. ________ b. Amounts owed…...

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