Among the transactions of Phoebe Inc. for the first two quarters of 2021 were the following: a. Phoebe Inc. recognized a P 100,000 write-down in its inventory during the 1st quarter. Athena Inc. had expected that the write-down will reverse in the 2nd quarter, and in fact, in the 2nd quarter, the recovery exceeded the previous write-down by P 20,000. b. Phoebe Inc. provides warranty for its sales. In the 1" quarter, Phoebe Inc. estimated a 5% warranty obligation on its 1st quarter sales of P 1,000,000. In the 2nd quarter, a change in accounting estimate was made. It estimated that the cost of warranty should be 10% of total sales. The 2nd quarter sales amounted to P 1,200,000. c. Phoebe Inc. has been estimating its bad debts expense at 2% of credit sales. However, in the 2nd quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for bad debts as of June 30, 2021 is computed at P 30,000. The allowance has a balance of P 5,000 at the beginning of the year. Total write-offs during the first six months of 2021 amounted to P 12,000; recoveries totalled P 3,000. Credit sales for the 1 and 2nd quarters amounted to P 1,000,000 and P 2,000,000, respectively.

Among the transactions of Phoebe Inc. for the first two quarters of 2021 were the following: a. Phoebe Inc. recognized a P 100,000 write-down in its inventory during the 1st quarter. Athena Inc. had expected that the write-down will reverse in the 2nd quarter, and in fact, in the 2nd quarter, the recovery exceeded the previous write-down by P 20,000. b. Phoebe Inc. provides warranty for its sales. In the 1" quarter, Phoebe Inc. estimated a 5% warranty obligation on its 1st quarter sales of P 1,000,000. In the 2nd quarter, a change in accounting estimate was made. It estimated that the cost of warranty should be 10% of total sales. The 2nd quarter sales amounted to P 1,200,000. c. Phoebe Inc. has been estimating its bad debts expense at 2% of credit sales. However, in the 2nd quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for bad debts as of June 30, 2021 is computed at P 30,000. The allowance has a balance of P 5,000 at the beginning of the year. Total write-offs during the first six months of 2021 amounted to P 12,000; recoveries totalled P 3,000. Credit sales for the 1 and 2nd quarters amounted to P 1,000,000 and P 2,000,000, respectively.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 24E: Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January...

See similar textbooks

Similar questions

On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021. Classical's fiscal year ends on December 31. Financial statements are issued in April 2022 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 5% of sales. Sales were $2.1 million (all credit) for 2021. Actual warranty expenditures were $40,100 and were recorded as warranty expense when Incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 2% of credit sales will eventually prove uncollectible. 3. in December 2021, the state of Tennessee filed sult against Classical, seeking penalties for violations of clean air laws. On January 23, 2022, Classical reached a settlement with state authorities to pay $1.6 million in penalties. 4. Classical is the plaintiff in a $4.1 milion lawsuit filled against a suppiler.…
The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical's fiscal year ends on December 31. Financial statements are issued in April 2025. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 5% of sales. Sales were $2.4 million (all credit) for 2024. Actual warranty expenditures were $47,100 and were recorded as warranty expense when incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 2% of credit sales will eventually prove uncollectible. 3. In December 2024, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23, 2025, Classical reached a settlement with state authorities to pay $1.9 million in penalties. 4. Classical is the plaintiff in a $4.4 million lawsuit filed against a…
The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical's fiscal year ends on December 31. Financial statements are issued in April 2025. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 3% of sales. Sales were $3.6 million (all credit) for 2024. Actual warranty expenditures were $45,900 and were recorded as warranty expense when incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 1% of credit sales will eventually prove uncollectible. 3. In December 2024, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23, 2025, Classical reached a settlement with state authorities to pay $3.1 million in penalties. 4. Classical is the plaintiff in a $5.6 million lawsuit filed against a…
The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical’s fiscal year ends on December 31. Financial statements are issued in April 2025. Classical's products carry a one-year warranty against manufacturer’s defects. Based on previous experience, warranty costs are expected to approximate 4% of sales. Sales were $2.5 million (all credit) for 2024. Actual warranty expenditures were $40,000 and were recorded as warranty expense when incurred. Although no customer accounts have been shown to be uncollectible, Classical estimates that 3% of credit sales will eventually prove uncollectible. In December 2024, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23, 2025, Classical reached a settlement with state authorities to pay $2.0 million in penalties. Classical is the plaintiff in a $4.5 million lawsuit filed against a supplier. The…
Concord Factory provides a 2-year warranty with one of its products which was first sold in 2020. Concord sold $930,400 of products subject to the warranty. Concord expects $124,050 of warranty costs over the next 2 years. In that year, Concord spent $70,460 servicing warranty claims. Prepare Concord's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date 2020 During 2020 12/31/20 Account Titles and Explanation Cash Sales Revenue (To record sales) Warranty Expense Warranty Liability (To record warranty claims) Warranty Liability Cash Debit 930400 il 70460 124050 Credit 930400 lil 70460 124050
Casio Co. sells calculators that carry a one- year warranty against manufacturer's defects. Based on company experience, warranty costs are estimated at P 300 per calculator. During 2019, Casio sold 24,000 calculators and paid warranty costs of P 170,000. In its income statement for the year ended Dec. 31, 2019, how much should Casio report as warranty expense? * A.P 5,500,000 B.P 2,400,000 C.P 1,700,000 D.P 7,200,000
Ivanhoe Factory provides a 2-year warranty with one of its products which was first sold in 2020. Ivanhoe sold $909,800 of products subject to the warranty. Ivanhoe expects $124,480 of warranty costs over the next 2 years. In that year, Ivanhoe spent $73,090 servicing warranty claims. Prepare Ivanhoe's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date 2020 During 2020 12/31/20 Account Titles and Explanation (To record sales) (To record warranty claims) Debit Credit
Veneer Company started selling a new product that carried a two-year warranty against defect. Based upon pastexperience with other products, the estimated warranty costs related to peso sales are computed as follows:first year of warranty 3%second year of warranty 5%Total sales and actual warranty repairs for 2019 and 2020 are given below:2019 2020Sales P420,000 P696,000Actual warranty expenditures 14,880 18,000What amount should Veneer report as its estimated warranty liability as of December 31, 2020?Prepare all entries related to the above transactions of Veneer Company.
On December 1, 2021, Wonder Company assigned P400,000 of accounts receivable to Woman Company as a security for a loan of P335,000. Wonder Company charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During December, Wonder collected P110,000 on assigned accounts after deducting P380 of discounts. Wonder accepted returns worth P1,350 and wrote off assigned accounts totaling P2,980. how much cash did wonder receive from woman at the time of the transfer? what is the carrying value of the account receivable assigned of december 31, 2021