Reference no: EM1310182

1) Baker, a branch manager, is allowed a bonus of 10% of income after bonus and tax. If the tax rate is 30% and income before bonus and tax is $200,000, what is Mr. Baker's bonus?

2) Blocker, Inc. had $10,000 of notes coming due on January 10, 2011. On January 5, 2011, the company used $2,000 of excess cash to pay off part of the note. On January 8, 2011, a refinancing was completed. The $2,000 payment was refunded and added back to the note balance, and the note was extended for another two years. On the December 31, 2010 balance sheet, how much of the $10,000 note should be shown as current?

3) Bonita places a coupon in each box of its product. Customers may send in five coupons and $3, and the company will send them a recipe book. Sufficient books were purchased at a cost of $5 each. A total of 400,000 boxes of product were sold in 2010. It was estimated that 6% of the coupons would be redeemed. During 2010, 8,000 coupons were redeemed. Which entry should be made at December 31, 2010?

4) Carl's Video includes the amount of sales taxes collected directly in the price charged for merchandise, and the total amount is credited to Sales. During January, Sales was credited for $239,680. The January 31 adjusting entry to account for a 7% state sales tax should be?

5) Cooper's inventory has been financed 100% with a long-term note. The note is coming due in 2011. Cooper has received a commitment from a new lender that permits five-year refinancing of debt up to an amount equal to 50% of inventory, which is expected to range between $9,000 and $15,000 in 2011. At December 31, 2010, how much of the company's currently maturing note payable can be classified as long-term debt?

6) Existing claims related to product warranties and litigation as of December 31, 2010, indicate that it is probable that a liability has been incurred. However, as of December 31, 2010, the amount of the obligation cannot be reasonably estimated. Based on these facts, an estimated loss contingency should be

7) Existing claims related to product warranties and litigation as of December 31, 2010, indicate that it is probable that a liability has been incurred. However, as of December 31, 2010, the exact amount of the obligation cannot be reasonably estimated, but a range of possible amounts has been determined. Based on these facts, an estimated loss contingency should be

8) Miller Company provides a bonus compensation plan under which key employees receive bonuses equal to 10% of Miller's income after deducting income taxes but before deducting the bonus. If income before income tax and the bonus is $400,000 and the income tax rate is 30%, the bonuses should total

9) On January 1, 2010, the Long Company signed a six-month, non-interest-bearing note payable for $160,000 and received $152,800 from Friendly Bank. On January 31, 2010, what amount should Long record for interest expense, and what is the net carrying value of the note?

10) Prince sells a certain product for $20,000. Included in this price is an implied service contract of $800. Fifty machines were sold in 2010. Warranty expense incurred during 2010 amounted to $25,000. The company uses the sales warranty accrual method. Which entry would probably not be made in 2010?

11) The Jung Company includes a premium in each box of its cereal. For four premiums plus $2.00, customers are entitled to a plastic doll that costs Jung $4.50 each. Jung expects 60% of the premiums to be redeemed. In 2010, Jung sold 500,000 boxes of cereal and distributed 25,000 dolls
What is Jung's estimated liability for unredeemed premiums on December 31, 2010?

12) The Jung Company includes a premium in each box of its cereal. For four premiums plus $2.00, customers are entitled to a plastic doll that costs Jung $4.50 each. Jung expects 60% of the premiums to be redeemed. In 2010, Jung sold 500,000 boxes of cereal and distributed 25,000 dolls
What is Jung's premium expense for 2010?

13) In 2010, the Markel Company sold 14,000 washing machines. Markel estimated that 12% of the machines would require repairs under the two-year warranty at an average cost of $50. During 2010, Markel had an actual outlay of $48,000 for repairs under warranty. Markel uses the expense warranty accrual method
At what amount should the company record warranty expense for 2010?

14) In 2010, the Markel Company sold 14,000 washing machines. Markel estimated that 12% of the machines would require repairs under the two-year warranty at an average cost of $50. During 2010, Markel had an actual outlay of $48,000 for repairs under warranty. Markel uses the expense warranty accrual method

What amount should the company report for estimated liability under warranties at the end of 2010?

15) Paul Company includes three coupons in each package of crackers it sells. In exchange for 20 coupons, a customer will receive a cheese plate. Paul estimates that 30% of the coupons will be redeemed. In 2010, Paul sold 4,000,000 boxes of crackers and purchased 150,000 cheese plates at $2.50 each. During the year, 970,000 coupons were redeemed.

What amount should Paul record as premium expense for 2010?

16) Paul Company includes three coupons in each package of crackers it sells. In exchange for 20 coupons, a customer will receive a cheese plate. Paul estimates that 30% of the coupons will be redeemed. In 2010, Paul sold 4,000,000 boxes of crackers and purchased 150,000 cheese plates at $2.50 each. During the year, 970,000 coupons were redeemed.
What amount should Paul report as estimated premium claims outstanding at December 31, 2010?

17) During 2010, the Alexandra Company began selling a new type of machine that carries a two-year warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $2,000 per machine sold. During 2010, sales and actual warranty expenditures were $2,000,000 (40 machines) and $22,000, respectively.
What amount should Alexandra report as its warranty expense for 2010?

18) During 2010, the Alexandra Company began selling a new type of machine that carries a two-year warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $2,000 per machine sold. During 2010, sales and actual warranty expenditures were $2,000,000 (40 machines) and $22,000, respectively.
What amount should Alexandra report as its estimated warranty liability at December 31, 2010?

19) The Ancira Company closed its books annually on December 31, while the city in which it is located has a fiscal year beginning on April 1 and ending on March 31. Taxes on property are assessed on April 1 of each year. Property taxes in the amount of $360,000 and $400,000 were assessed on April 1, 2010 and 2011, respectively. For the year ended December 31, 2011, the Ancira Company would report property tax expense of

20) The Chipo Company includes one coupon having no expiration date with its deluxe snack pack. Upon return of 10 coupons, Chipo will send a silver chip clip, which costs Chipo $1.50 each. Past experience indicates that 30% of coupons issued will be redeemed. Chipo began this promotion in 2010 and sold 1,000,000 deluxe snack packs. During 2010, 90,000 coupons were received and 9,000 chip clips were distributed to customers. The December 31, 2010 balance sheet should include a liability for coupons outstanding of