Acct 4 Assignment

Problem - Premiums
2012
1. Cash
Sales
2. Premiums - towels
Cash
3. Cash (1,000 x 20)
Premiums expense
Premiums towels (1,000 x 100)
4. Premium expense (1,000 X 5)
Cash
5. Premium expense
Estimated premiums payable (600 X 85)
2013
1. Estimated premiums payable
Premium expense
Cash
Sales
2,500,000
2,500,000
175,000
175,000
20,000
80,000
100,000
5,000
5,000
51,000
51,000
51,000
51,000
3,125,000
3,125,000
2. Premiums - towels
Cash
200,000
3. Cash (1,800 x 20)

Premiums expense
Premiums towels (1,800 x 100)
36,000
144,000
4. Premium expense (1,800 X 5)

Cash
5. Premium expense
Estimated premiums payable (800 X 85)
200,000
180,000
9,000
9,000
68,000
68,000
Statement classification
Current asset:
Premiums towels
Current liability:
Estimated premiums payable
Selling expense:
Premium expense
2012
2013
75,000
95,000
51,000
68,000
136,000
170,000
Problems-Loyalty Program
2012
Cash
Sales
Unearned Revenue-points
Sales
9,000,000
7,000,000
2,000,000
750,000
750,000
Points to be redeemed (80%x50,000)
40,000
Revenue recognized in 2012 (15,000/40,000x2,000,000)

2013
Unearned revenue-points
Sales
750,000
330,000
330,000
Points to be redeem (85%x50,000)
42,500
Total points redeemed to 12/31/2013 (15,000 + 7,950)
22,950
Cumulative Revenue-12/31/2012 (22,950/42,500 x 2,000,000)

Revenue recognized in 2012
Revenue to be recognized in 2013
1,080,000
(750,000)
330,000
2014
Sales
120,000
120,000
Points to be redeemed (85% x 50,000)
42,500
Points redeemed to 12/31/2014 (15,000+7,950+2,550)
25,500
Cumulative Revenue 12/31/2014 (25,500/42,500x 2,000,000)

Cumulative Revenue 12/31/2013
1,200,000
1,080,000
120,000
2015
Unearned Revenue-Points
Sales
600,000
600,000
Points to be redeemed (90% x 50,000)
45,000
Points redeemed to 12/31/2015 (15,000+7,950+2,550+15,000)
40,500
Cumulative Revenue-12/31/2015 (40,500/45,000 x 2,000,000)

Cumulative Revenue-12/31/2014
1,800,000
1,200,000
600,000
Programs-Warranty
Requirement 1
Expense as incurred approach
2012
1. Cash
Sales
4,500,000
4,500,000
2. Warranty expense
Cash
40,000
40,000
2013
1. Cash
Sales
7,500,000
7,500,000
2. Warranty expense
Cash
150,000
150,000
Requirement 2
Accrual approach
2012
1. Cash (300 x 15,000)
Sales
2. Warranty expense
Estimated warranty liability (60% x 300 = 180 x 800)
3. Estimated warranty liability
Cash
2013
1. Cash (500 x 15,000)
Sales
4,500,000
4,500,000
144,000
144,000
40,000
40,000
7,500,000
7,500,000
2. Warranty expense
Estimated warranty liability (60% x 500 = 300 x 800)
240,000
3. Estimated warranty liability

Cash
150,000
240,000
150,000
Requirement 3
Warranty expense:
2012
2013
Actual warranty payments:
2012
2013
Estimated warranty liability-12/31/2013
144,000
240,000
40,000
150,000
384,000
190,000
194,000
Requirement 4 Warranty expense related to 2012

2012
First contract year of 1/1/2012 sales (150x20%xP800)
First contract year of 7/1/2012 sales (150x20%xP800x6/12)
24,000
12,000
2013
Second contract year of 1/1/2012 sales (150x40%xP800)
Second contract year of 7/1/2012 sales (150x40%xP800x6/12)
12,000
48,000
24,000
2014
24,000
Warranty expense for 2012
144,000
Warranty expense related to 2013 sales

2013
First contract year of 1/1/2013 sales (250x20%xP800)
40,000
20,000
2014
First Contract year of 7/1/2013 sales (250x20%xP800x6/12)
Second contract year of 1/1/2013 sales (250x40%xP800)
20,000
80,000
40,000
2014
40,000
Warranty expense for 2013
240,000
Requirement 5
2012 sales still under warranty after 12/31/2013:
Second contract year of 7/1/2012 sales
240,000
2013 sales still under warranty after 12/31/2013

First contract year of 7/1/2013 sales
Second contract year of 1/1/2013 sales
Second contract year of 7/1/2013 sales (40,000+40,000)
Estimated warranty liability-12/31/2012
Estimated warranty liability per book
Increase in warranty liability
Warranty expense
Estimated warranty liability
20,000
80,000
80,000
204,000
194,000
10,000
10,000
10,000
Problem-comprehensive warranty
Requirement 1
January
February
March
April
May
June
Total
Sales
Percent
Total returns
4.2 M
4.7 M
3.9 M
3.250 M
2.4 M
1.9 M
7%
7%
7%
7%
10%
10%
294,000
329,000
273,000
227,500
240,000
190,000
Returns after
6/30/2012
10%
20%
30%
50%
70%
100%
Total of Sales Return

Sales
January
February
March
April
May
June
January
February
March
April
May
June
30%
-
20%
30
-
20%
20
30
-
10%
20
20
30
-
10%
10
20
20
30
-
Requirement 2
Manufacturing cost
Freight
Total
Salvage
Net loss on component returned
70%
5
75%
(10)
65%
Required estimated warranty liability-6/30/2012 (648,850x65%)

Estimated warranty liability per book
Increase in warranty liability
421,753
120,400
301,353
Amount
29,400
65,800
81,900
113,750
168,000
190,000
640,850
Total
Returns
as of
6/30/2012
90
80
70
50
30
-
Requirement 3
Warranty expense
Estimated Warranty Liability
301,353
301,353
Problem Payroll
Commission
Salary
Total
120,000
10,000
130,000
120,000
10,000
130,000
120,000
96,000
10,000
10,000
130,000
106,000
60,000
10,000
70,000
24,000
10,000
34,000
600,000
Frances
(5%x2,400,000)
Salome
(5%x2,400,000)
Gina (5%x2,400,000)
Jerry (4%x2,400,000)
Michael
(5%x2,400,000)
Liezl (5%x2,400,000)
Total
Problem-unearned revenue
Unearned revenue-January
Add: Gift certificates sold
Total
Less: Gift certificates redeemed
Expired gift certificates
Unearned revenue-December 31
Problem-unearned service contract
1. Cash
Unearned service contract revenue
650,000
2,250,000
2,900,000
1,950,000
100,000
2,050,000
850,000
980,000
980,000
Service contract expense

Cash
520,000
Unearned service contract revenue

Service contract revenue
860,000
2. Unearned revenue January 1

Cash receipts from contracts sold
Total
Less: Service revenue recognized
Unearned revenue December 31
520,000
860,000
600,000
980,000
1,580,000
860,000
720,000

Acct 4 Assignment

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Acct 4 Assignment

Uploaded by

Copyright:

Available Formats

Problem - Premiums

3. Cash (1,800 x 20)

4. Premium expense (1,800 X 5)

Points to be redeemed (80%x50,000)

Revenue recognized in 2012 (15,000/40,000x2,000,000)

Points to be redeem (85%x50,000)

Total points redeemed to 12/31/2013 (15,000 + 7,950)

Cumulative Revenue-12/31/2012 (22,950/42,500 x 2,000,000)

Points to be redeemed (85% x 50,000)

Points redeemed to 12/31/2014 (15,000+7,950+2,550)

Cumulative Revenue 12/31/2014 (25,500/42,500x 2,000,000)

Points to be redeemed (90% x 50,000)

Points redeemed to 12/31/2015 (15,000+7,950+2,550+15,000)

Cumulative Revenue-12/31/2015 (40,500/45,000 x 2,000,000)

3. Estimated warranty liability

Requirement 4 Warranty expense related to 2012

Warranty expense for 2012

Warranty expense related to 2013 sales

Warranty expense for 2013

2013 sales still under warranty after 12/31/2013

Total of Sales Return

Required estimated warranty liability-6/30/2012 (648,850x65%)

Service contract expense

Unearned service contract revenue

2. Unearned revenue January 1

You might also like