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31 estimated warranty payable are reported on the balance sheet as a administrative 4297885

 

31) Estimated warranty payable are reported on the balance sheet as:

A) administrative expenses.

B) a long-term liability.

C) a current liability.

D) part of cost of goods sold.

32) The accounting principle requiring that a company record the warranty expense in the same period that it records sales revenue is the:

A) going concern principle.

B) matching principle.

C) conservatism principle.

D) consistency principle.

33) Omaha Bank lends Nebraska Paper Company $100,000 on January 1. Nebraska Paper Company signs a $100,000, 8%, 6-month note. The entry made by Nebraska Paper Company on January 1 to record the proceeds and issuance of the note would include:

A) a debit to cash of $92,000.

B) a debit to interest expense of $8,000.

C) a credit to Notes Payable of $100,000

D) a credit to Interest Payable of $8,000.

34) Monthly sales were $200,000. Warranty costs are estimated at 4% of monthly sales. In the month of sale, the company should record a credit to:

A) Warranty Payable for $8,000.

B) Warranty Expense for $8,000.

C) Sales for $8,000.

D) Inventory for $8,000.

35) Tyler Company paid $1,500 cash to replace a wheel on equipment sold under warranty. The entry to record the payment would be to:

A) debit warranty expense and credit cash.

B) debit equipment expense and credit cash.

C) debit warranty payable and credit cash.

D) debit parts expense and credit cash.

36) Mitchell Corporation sells 4,000 units of inventory during the year for $500 each. The selling price includes a one-year warranty on parts. It is estimated that 3% of the units will be defective and that repair costs are estimated to be $50 per unit. In the year of sale, warranty contracts are honored on 80 units for a total cost of $4,000. What amount will be reported as Estimated Warranty Liability at the end of the year?

A) $4,000.

B) $2,000.

C) $6,000.

D) $0.

37) Michigan Bank lends Canton Furniture Company $100,000 on December 1. Canton Furniture Company signs a $100,000, 8%, 4-month note. The entry made by Canton Furniture Company on December 31 to record the accrued interest on the note would be:

A) a debit to interest expense and a credit to interest payable of $2,000.

B) a debit to interest payable and a credit to interest expense of $2,000.

C) a debit to interest expense and a credit to cash of $2,000.

D) a debit to interest payable and a credit to cash of $2,000.

38) Michigan Bank lends Canton Furniture Company $100,000 on December 1. Canton Furniture Company signs a $100,000, 8%, 4-month note. The total cash paid for interest (only) at maturity of the note is:

A) $6,000.

B) $8,000.

C) $4,000.

D) $32,000

39) Michigan Bank lends Canton Furniture Company $100,000 on December 1. Canton Furniture Company signs a $100,000, 8%, 4-month note. The total cash paid at maturity of the note is:

A) $108,000.

B) $106,000.

C) $100,000.

D) $104,000.

40) The journal entry to record accrued interest on a short-term note payable must include a debit to:

A) interest payable and a credit to cash.

B) interest expense and a credit to cash.

C) interest expense and a credit to interest payable.

D) interest payable and a credit to notes payable.

 

 

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