Reference no: EM132582515
Beartooth Appliances sells televisions for $1,900 each, which includes a 2-year assurance-type warranty that requires the company to perform periodic services and to replace defective parts. During 2020, Beartooth sold 600 televisions for cash. Based on experience, the company has estimated the total 2-year warranty costs to be $40. (Assume sales all occur on December 31, 2020.) In 2021, Beartooth Company incurred actual warranty costs relative to 2020 television sales of $13,000.
Beartooth also sells a five-year extended warranty for $300. Warranty expenditures are assumed to be zero in the first two years (since the assurance-type warranty covers these repairs) and then evenly over the final three years.
Of the 600 televisions sold in 2020, half the customers purchased the extended warranty. During 2023, Beartooth incurred $22,000 in warranty costs related to the 2020 television sales and the extended warranty. Beartooth Corporation follows IFRS.
Instructions
Problem 1: Prepare the entries for the sale of the televisions, including both warranties.
Problem 2: Prepare the entry for 2021 warranty costs. Use a date of May 30.
Problem 3: Prepare the 2023 entry for the warranty costs (use a date of May 30) and the December 31, 2023, adjusting entry for the extended warranty.
On June 30, 2020, Helmer Corp. issued $500,000 in long-term bonds. The bonds will mature in 10 years and have a stated interest rate of 8%. The market rate at time of issue was 10%. The bonds pay interest semi-annually on June 30 and December 31. On September 30, 2022, Helmer decided to retire 20% of the bonds. At that time, the bonds were selling at 98. Helmer follows IFRS.
Instructions
(Round all values to the nearest dollar.)
Problem 4: account for all entries related to the issuance of the bonds and payments of interest to June 30, 2022.
Problem 5: Prepare the journal entries to record the partial retirement on September 30, 2022. This question is easier to do if you make an amortization table in Excel.