Reference no: EM131597703
1. Dylan Corp leases some unused warehouse space to Carter Corp for $5k/month, payable in advance. On 8/01/2013 Dylan received $60k rent from Carter for the one year period 8/01/2013 - 7/31/2014.
Required: Determine how much of this $60k rent received by Dylan on 8/01/13 should recognize in its:
income statement for the year ended 12/31/2013 as rent revenue, and
12/31/2013 balance sheet as unearned rent revenue?
2. Clark Corp began operations on 1/01/14 and has a fiscal year end of 12/31. Clark rebuilds transmissions and provides a 12 month warranty on all its work. Clark estimates that warranty performance cost will be approximately 2% of revenue. During 2015, Clark rebuilds transmissions and charges customers a total of $600,000. Also during 2014, Clark performs warranty work and in doing so incurs costs totaling $5,600.
Required:
I. Determine the amount of warranty expense to appear in the year-end 12/31/14 income statement, and
II. Determine the amount of estimated warranty liability to appear in the 12/31/14 balance sheet.
3. Assume that on 1/01/2014 Filbeck Corp issues 4 year bonds with a face value of $5 mil and a stated interest rate of 7% with interest payable annually on 12/31 and maturing on 12/31/2017.
Required: Provide amortization tables similar to those in Exhibit 5.1 assuming that:
I. the market rate at issuance was 7%,
II. the market rate at issuance was 6%,
III. the market rate at issuance was 8%.