Reference no: EM133019612

Questions -

Q1 - Below are selected entries for Flounder Co.:

1. The $90 cost of repairing a printer was charged to Equipment.

2. The $5,600 cost of a major engine overhaul was debited to Repairs Expense. The overhaul is expected to increase the operating efficiency of the truck.

3. The $6,600 closing costs associated with the acquisition of land were debited to Legal Fees Expense.

4. A $660 charge for transportation costs on new equipment purchased was debited to Delivery Expense.

5. Freight cost incurred bringing a new piece of equipment to the plant site was charged to Equipment.

For each entry below make a correcting entry if necessary.

Q2 - Ivanhoe Company purchased real estate for $1,170,000, which included $5,900 in legal fees. It paid $259,000 cash and incurred a mortgage payable for the balance. The real estate included land that was appraised at $478,100, a building appraised at $751,300, and fences and other land improvements appraised at $136,600. The building has an estimated useful life of 60 years and a $51,000 residual value. Land improvements have an estimated 15-year useful life and no residual value. Calculate the cost that should be allocated to each asset purchased.

Q3 - Sunland Company sells 1970 units of its product for $470 each in 2021. The selling price includes a one-year warranty on parts. It is expected that 5% of the units will be defective and that repair costs will average $90 per unit. In 2021, warranty contracts are honoured on 50 units for a total cost of $4500. What amount should Sunland Company record in 2021 for warranty expense?