Reference no: EM132613464

Questions -

Q1) On July 1, 2020, Thornhill Corp. issued $ 800,000, 4% bonds at 98 plus accrued interest. The bonds are dated April 1, 2020 and mature on April 1, 2027. Interest is payable semi-annually on April 1 and October 1. How much did Thornhill receive from the bond issuance?

a. $ 784,000

b. $ 776,000

c. $ 792,000

d. $ 800,000

Q2) Rathburn Company's salaried employees are paid biweekly. Information relating to salaries for the calendar year 2020 is as follows:

Accrued salaries payable Jan. 1, 2020 $182,000

Salaries expense for 2020 1,820,000

Salaries paid during 2020 (gross) 1,750,000

At December 31, 2020, what amount should Rathburn report for accrued salaries payable?

a. $252,000

b. $182,000

c. $240,000

d. $70,000

Q3) Which of the following statements is INCORRECT regarding the recording of the related increase or accretion in the carrying amount of an asset retirement obligation (ARO)?

a. Under ASPE, it is recognized as an operating expense (but not as interest expense).

b. The amount should be calculated using the same discount (interest rate) as was used to calculate the initial present value of the ARO.

c. Under IFRS, it is recognized as a borrowing cost.

d. Under ASPE, it is recognized as interest expense.

Q4) In 2020, Meleum Corp. began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows:

First year of warranty 2%

Second year of warranty 5%

Sales and actual warranty expenditures for 2020 and 2021 are presented below:

2020 2021

Sales $450,000 $600,000

Actual warranty expenditures 15,000 30,000

Meleum uses the expense approach to account for warranties. What is the estimated warranty liability at the end of 2021?

a. $28,500

b. $73,500

c. $43,500

d. $12,000

Q5) Onyx Corp. uses the expense approach to account for warranties. They sell a used car for $ 30,000 on Oct 25, 2020, with a one-year warranty covering parts and labour. Warranty expense is estimated at 2% of the selling price, and the appropriate adjusting entry is recorded at Dec 31, 2020. On March 12, 2021, the car is returned for warranty repairs. This cost Onyx $ 200 in parts and $ 120 in labour. When recording the March 12, 2021 transaction, Onyx would debit Warranty Expense with

a. $200.

b. $120.

c. zero.

d. $320.