month of its accounting year, the manufacturer must debit Warranty Expense for $5,000,000 (5,000 cars X $1,000)and will credit Warranty Liability for $5,000,000. When warranty work is done, the manufacturer debits...
month of its accounting year, the manufacturer must debit Warranty Expense for $5,000,000 (5,000 cars X $1,000)and will credit Warranty Liability for $5,000,000. When warranty work is done, the manufacturer debits...
which end on December 31. The accrued interest as of December 31 is $50 ($20,000 X 6% = $1,200 per year = $100 per month = $50 for 1/2 month). The company’s adjusting entry will debit Interest Expense for $50,...
, the company purchases a new machine for $300,000 that is expected to have no salvage value at the end of its 10-year useful life. If the company uses the straight-line method of depreciation, the depreciation expense...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
Our Explanation of Standard Costing uses an easy-to-relate to example for illustrating a manufacturer's standard costs and variances. Also provided is a chart which indicates each variance, what it tells you, and where...
Our Explanation of Standard Costing uses an easy-to-relate to example for illustrating a manufacturer's standard costs and variances. Also provided is a chart which indicates each variance, what it tells you, and where...
Payable on February 5. When paying the vendor on February 13, JAYCO will debit Accounts Payable for $1,000 and will credit Cash for $990 and will credit Purchase Discounts for $10 ($1,000 X 1%). 8. If JAYCO uses the net...
for working on the job will be 1,880 hours per year (2,080 hours minus 200 hours) multiplied by $20 per hour = $37,600 for a year. Next let’s assume the following are the annual costs for the fringe benefits earned by...
Medicare tax is withheld from an employee’s gross pay without limit at the rate of 1.45% of gross pay. In our example, Sam’s regular Medicare tax for the year is $4,350 ($300,000 X 0.0145). Jones Corporation must...
the preferred stockholders dividends of $2,500 (par value of $50,000 X 5%) each year. Example of Stock with No Par Value If a corporation is not required to have a par value (or a stated value) for its common stock and...
($40,000 X 70%). To comply with the cost principle the company will debit Purchases (or Inventory) for $28,000 and will credit Accounts Payable for $28,000. Early payment discount. Some suppliers offer discounts of 1%...
memo for $60 (5 units X $12) and asks GoodCorp to destroy or donate the 5 units. SalesMax will record the $60 credit memo by debiting Sales Returns and Allowances for $60 and crediting Accounts Receivable by $60....
X 0.003) and credit Allowance for Doubtful Accounts for $2,400. As a result, its November income statement will be matching $2,400 of bad debts expense with the credit sales of $800,000. If the balance in Accounts...
of $42,000 Cost of goods available: $57,000 ($15,000 + $42,000) Cost of goods sold: sales of $50,000 X 80% = $40,000 Ending Inventory at July 31 at its estimated cost: $17,000 ($57,000 cost of goods available minus...
Expense. But as the owner, you are likely to be more upset that the employee cost you $3,000 (10 hours X $300) in lost profits and upset customers. In the above story the opportunity cost was $3,000 of lost profit + the...
Security tax of 6.2%. As a result, the amount withheld from the employee’s pay for the Social Security tax will be $9,932.40 ($160,200 X 0.062). In addition, the employer must match the amount withheld and remit...
inventories and cost of goods sold contain $2 per pound for the materials and its materials purchase price variance account contains an unfavorable variance of $600,000 [1,000,000 X ($2.60 – $2.00)]. To comply with...
and the FIFO cost flow assumption, its inventory will be reported at the cost of $2,400 (200 units X $12). On the other hand if the company uses the periodic system and the LIFO cost flow assumption, its inventory will...
bill x is the number of production machine hours (the independent variable) for the period of the electricity bill The software will also provide statistics for the following: correlation, confidence, dispersion around...
—as required by generally accepted accounting principles (GAAP)—and the profit that would have been reported if replacement cost had been used. For example, Company X sells products that are petroleum based. The...
is $100,000 (since it occurs at the present time). The present value of the $20,000 cash inflows occurring at the end of 7 years is $89,730 ($30,000 X 2.991). Therefore, the combination of the present values of the cash...
Our Explanation of Manufacturing Overhead gives you examples of what is included in manufacturing overhead. You will learn that these are indirect product costs and therefore are allocated to the products in order to...
. ITR = cost of goods sold divided by average inventory Cost of goods sold (COGS) in this question = sales X 70% COGS = $600,000 X 70% = $420,000 ITR = $420,000 divided by the average inventory of $100,000 Inventory...
it by the 150 units available for a weighted-average of $11.80 per unit. The $11.80 is applied to both the units sold and to the units remaining in Inventory. The cost of goods sold is 120 units X $11.80 = $1,416. [The...
an entry to debit Uncollectible Accounts Expense for $200 ($100,000 X 0.002) and credit Allowance for Uncollectible Accounts for $200. (Periodically, the company should also prepare an aging to be certain that the...
and their related costs before using the high-low method. (The number of units uses the scale on the x-axis and the related total cost at each level of activity uses the scale on the y-axis.) It is possible that at...
much of the monthly electricity bill is a fixed amount and how the electricity bill will increase when the equipment runs for an additional hour. The scattergraph’s vertical or y-axis indicates the dollars of total...
. Therefore, if you invest $100,000 at 10% interest for 7 years, it will grow to a future value of $194,872 ($100,000 X 1.94872). Note that this is the same as the amount we have in the table above. Frequency of...
Typically the stated interest rate will not change and is therefore considered to be a fixed rate. This will result in the semiannual interest payments being the same amount. The formula for the semiannual interest...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
expense. Interest Expense Of $1,000 Right! The income statement must report the interest incurred regardless of the date the interest is paid. $100,000 X .12 X 1/12 = $1,000. 6. Is a retailer's Interest...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
will be the amount to be accrued? Select... $1,200.00 $3,000.00 $3,600.00 $4,200.00 View Coaching As of Tuesday, the company has a liability of $4,200 consisting of $3,000 (for the 5 days X $600 per day in the previous...
December income statement as Insurance Expense of $400. The remaining $2,000 of unexpired insurance (5 months X $400) must be reported on the December 31 balance sheet as a current asset such as Prepaid Insurance or...
Our Explanation of Depreciation emphasizes what the depreciation amounts on the income statement and balance sheet represent. Learn why depreciation is an estimated expense that does not assist in determining the current...
Our Explanation of Present Value of a Single Amount discusses the time value of money and the need to discount future amounts to the time of an investment or other transaction. The present value of 1 table is used to...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
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