Reference no: EM131115764
1. Warranties, Accrual, and Cash Basis Alvarado Company sells a machine for $7,400 under a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 600 machines in 2010 (warranty expense is incurred half in 2010 and half in 2011). As a result of product testing, the company estimates that the warranty cost is $390 per machine ($170 parts and $220 labor). Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the following facts?
(a) Under application of the expense warranty accrual method for:
(1) Sale of machinery in 2010.
(2) Warranty costs incurred in 2010.
(3) Warranty expense charged against 2010 revenues.
(4) Warranty costs incurred in 2011.
(b) Under application of the cash-basis method for:
(1) Sale of machinery in 2010.
(2) Warranty costs incurred in 2010.
(3) Warranty expense charged against 2010 revenues.
(4) Warranty costs incurred in 2011.
(c) What amount, if any, is disclosed in the balance sheet as a liability for future warranty costs as of December 31, 2010, under each method?
(d) Which method best reflects the income in 2010 and 2011 of Alvarado Company? Why?
|
Prepare the journal entries that should be recorded in 2011
: Premium Entries to stimulate the sales of its Alladin breakfast cereal, Loptien Company places 1 coupon in each box. Five coupons are redeemable for a premium consisting of a children's hand puppet.
|
|
Discuss new technology and how it will impact workplace
: In this discussion, you will conduct research and locate a new technology currently under development. Discuss the new technology and how it will impact the workplace.
|
|
What one-year return should lpy ltd expect
: LPY Ltd. has cash of $500,000 that will be used to create an investment portfolio. The portfolio will be invested evenly in two assets: What one-year return should LPY Ltd. expect to earn on its portfolio
|
|
Provide an analysis of the likely internal environment
: Provide an analysis of the likely internal environment of the power companies from your own experience, from what you can find on internet, from what is likely with long-held monopolies
|
|
Assuming that actual warranty costs are incurred
: What amount, if any, is disclosed in the balance sheet as a liability for future warranty costs as of December 31, 2010, under each method?
|
|
What return should qwc ltd expect to earn
: QWC Ltd. has cash of $100,000 that will be invested in an equity investment that has a beta of 2.25. What return should QWC Ltd. expect to earn
|
|
What is the average amount of time from when customer joins
: At a catalog order centre for gardening supplies, customers browse catalogs, look at display items, and fill out an order card for items that they wish to purchase. What is the average amount of time from when a customer joins the queue until they ar..
|
|
Identify the measurement issues
: discuss the possible impact the policy could have on the future of policymaking in your local government or state
|
|
In which of these stocks should you invest
: You are considering three stocks for investment purposes. The required return on the market portfolio is 14%, and the riskless return is 9%. Based on the information given, in which (if any) of these stocks should you invest?
|