Barbara Muller Services (BMS) pays its employees monthly. The payroll information listed below is for January, 2011, the first month of BMS's fiscal year. The journal entry to record payroll for the January 2011 pay period will include a debit to payroll tax expense of

Barbara Muller Services (BMS) pays its employees monthly. The payroll information listed below is for January, 2011, the first month of BMS's fiscal...

Which of the following may create employer liabilities in connection with their payrolls?

Which of the following may create employer liabilities in connection with their payrolls?  A. Employee withholding taxes B. Employee voluntary...

During the year, L&M Leather Goods sold 1,000,000 reversible belts under a new sales promotional program. Each belt carried one coupon, which entitles the customer to a $4.00 cash rebate. L&M estimates that 70% of the coupons will be redeemed, even though only 500,000 coupons had been processed during the year. At December 31, L&M should report a liability for unredeemed coupons of:

During the year, L&M Leather Goods sold 1,000,000 reversible belts under a new sales promotional program. Each belt carried one coupon, which entitles...

What was General's coupon promotional expense in 2012?

What was General's coupon promotional expense in 2012?  A. Zero, since all the expense should be reflected in 2011. B. $1.5 million. C. $7.5...

What was General's coupon promotion expense in 2011?

What was General's coupon promotion expense in 2011?  A. $30.0 million. B. $21.0 million. C. $13.5 million. D. $7.5 million Answer:...

General Product Inc. shipped 100 million coupons in products it sold in 2011. The coupons are redeemable for thirty cents each. General anticipates that 70% of the coupons will be redeemed. The coupons expire on December 31, 2012. There were 45 million coupons redeemed in 2011, and 30 million redeemed in 2012. What was General's coupon liability as of December 31, 2011?

General Product Inc. shipped 100 million coupons in products it sold in 2011. The coupons are redeemable for thirty cents each. General anticipates...

Carpenter Inc. had a balance of $80,000 in its warranty liability account as of December 31, 2010. In 2011, Carpenter's warranty expenditures were $445,000. Its warranty expense is calculated as 1% of sales. Sales in 2011 were $40 million. What was the balance in the warranty liability account as of December 31, 2011?

Carpenter Inc. had a balance of $80,000 in its warranty liability account as of December 31, 2010. In 2011, Carpenter's warranty expenditures were $445,000....

Panther Co. had a warranty liability of $350,000 at the beginning of 2011, and $310,000 at end of 2011. Warranty expense is based on 4% of sales, which were $50 million for the year. What were the warranty expenditures for 2011?

Panther Co. had a warranty liability of $350,000 at the beginning of 2011, and $310,000 at end of 2011. Warranty expense is based on 4% of sales, which...

In the current year, Hanna Company reported warranty expense of $190,000 and the warranty liability account increased by $20,000. What were warranty expenditures during the year?

In the current year, Hanna Company reported warranty expense of $190,000 and the warranty liability account increased by $20,000. What were warranty...

What is the rebate promotion liability that Holyoak should report in its December 31, 2011 balance sheet?

What is the rebate promotion liability that Holyoak should report in its December 31, 2011 balance sheet?  A. $20,000 B. $28,000 C. $18,000 D....

In 2011, Holyoak Inc. offers a $20 cash rebate coupon to customers who purchased one of its new line of products. Holyoak sold 10,000 of these products during the year. By year end of 2011, 7,600 of the rebates had been claimed, and 7,100 had been paid. Holyoak's historical experience with such rebates indicates that 85% of customers claim the rebates. What is the expense that Holyoak should report for its promotional rebates in its 2011 income statement?

In 2011, Holyoak Inc. offers a $20 cash rebate coupon to customers who purchased one of its new line of products. Holyoak sold 10,000 of these products...

During 2011, Deluxe Leather Goods sold 800,000 reversible belts under a new sales promotional program. Each belt carried one coupon, which entitles the customer to a $5.00 cash rebate. Deluxe estimates that 70% of the coupons will be redeemed, even though only 350,000 coupons had been processed during 2011. At December 31, 2011, Deluxe should report a liability for unredeemed coupons of:

During 2011, Deluxe Leather Goods sold 800,000 reversible belts under a new sales promotional program. Each belt carried one coupon, which entitles...

At the beginning of 2011, Angel Corporation began offering a 2-year warranty on its products. The warranty program was expected to cost Angel 4% of net sales. Net sales made under warranty in 2011 were $180 million. Fifteen percent of the units sold were returned in 2011 and repaired or replaced at a cost of $5.3 million. The amount of warranty expense on Angel's 2011 income statement is:

At the beginning of 2011, Angel Corporation began offering a 2-year warranty on its products. The warranty program was expected to cost Angel 4% of...

Captain Cook Cereal includes one coupon in each package of Granola that it sells and offers a puzzle in exchange for $2.00 and 3 coupons. The puzzles cost Captain Cook $3.50 each. Experience indicates that 20% of the coupons eventually will be redeemed. During the last month of 2011, the first month of the offer, Captain Cook sold 6 million boxes of Granola and 900,000 of the coupons were redeemed. What amount should Captain Cook report as a liability for coupons on its December 31, 2011, balance sheet?

Captain Cook Cereal includes one coupon in each package of Granola that it sells and offers a puzzle in exchange for $2.00 and 3 coupons. The puzzles...

Funzy Cereal includes one coupon in each package of Wheatos that it sells and offers a toy car in exchange for $1.00 and 3 coupons. The cars cost Funzy $1.50 each. Experience indicates that 40% of the coupons eventually will be redeemed. During the last month of 2011, the first month of the offer, Funzy sold 12 million boxes of Wheatos and 2.4 million of the coupons were redeemed. What amount should Funzy report as a promotional expense for coupons on its December 31, 2011, income statement?

Funzy Cereal includes one coupon in each package of Wheatos that it sells and offers a toy car in exchange for $1.00 and 3 coupons. The cars cost Funzy...

Volt Electronics sells equipment that includes a three-year warranty. Repairs under the warranty are performed by an independent service company under contract with Volt. Based on prior experience, warranty costs are estimated to be $25 per item sold. Volt should recognize these warranty costs:

Volt Electronics sells equipment that includes a three-year warranty. Repairs under the warranty are performed by an independent service company under...

A customer of Razor Sharpeners alleges that Razor's new razor sharpener had a defect that resulted in serious injury to the customer. Razor believes the customer has a 51% chance of winning the case, and that if the customer wins the case, there is a range of losses of between $1,000,000 and $3,000,000 in which any number is equally likely to occur. Under IFRS, Razor should accrue a liability in the amount of:

A customer of Razor Sharpeners alleges that Razor's new razor sharpener had a defect that resulted in serious injury to the customer. Razor believes...

A customer of RoughEdge Sharpeners alleges that RoughEdge's new razor sharpener had a defect that resulted in serious injury to the customer. RoughEdge believes the customer has a 51% chance of winning the case, and that if the customer wins the case, there is a range of losses of between $1,000,000 and $3,000,000 in which any number is equally likely to occur. Under U.S. GAAP, RoughEdge should accrue a liability in the amount of:

A customer of RoughEdge Sharpeners alleges that RoughEdge's new razor sharpener had a defect that resulted in serious injury to the customer. RoughEdge...

Accounting for costs of incentive programs for frequent customer purchases involves:

Accounting for costs of incentive programs for frequent customer purchases involves:  A. Recording an expense and a liability each period. B....

The accounting concept that requires recognition of a liability for customer premium offers is

The accounting concept that requires recognition of a liability for customer premium offers is  A. Periodicity. B. Conservatism. C. Historical...

The cost of customer premium offers should be charged to expense:

The cost of customer premium offers should be charged to expense:  A. When the related product is sold. B. When the premium offer expires. C....

Which of the following is a contingency that would most likely require accrual?

Which of the following is a contingency that would most likely require accrual?  A. Potential claims on extended warranties. B. Customer premium...

When a material gain contingency is probable and the amount of gain can be reasonably estimated, the gain should be:

When a material gain contingency is probable and the amount of gain can be reasonably estimated, the gain should be:  A. Reported in the income...

Z Co. filed suit against W, Inc. in 2011 seeking damages for patent infringement. At December 31, 2011, legal counsel for Z believed that it was probable that Z would be successful against W for an estimated amount in the range of $30 million to $60 million, with each amount in that range considered equally likely. Z was awarded $40 million in April 2012. Z should report this award in its 2011 financial statements, issued in March, 2012 as

Z Co. filed suit against W, Inc. in 2011 seeking damages for patent infringement. At December 31, 2011, legal counsel for Z believed that it was probable...

Red Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's assets in that country. If expropriation is probable, a loss contingency should be

Red Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's assets in that country. If expropriation...

Orange Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's asset in that country. If expropriation is reasonably possible, a loss contingency should be

Orange Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's asset in that country. If expropriation...

Blue Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's assets in that country. If the likelihood of expropriation is remote, a loss contingency should be

Blue Co. can estimate the amount of loss that will occur if a foreign government expropriates some of the company's assets in that country. If the likelihood...

Which of the following entail essentially the same accounting treatment?

Which of the following entail essentially the same accounting treatment?  A. Coupons for cash rebates and coupons for other premiums B. Cents-off...

The main difference between accounting for rebate and cash discount coupons is:

The main difference between accounting for rebate and cash discount coupons is:  A. The latter is not treated as an expense. B. Only the former...

Providing a monetary rebate program for purchasing a product:

Providing a monetary rebate program for purchasing a product:  A. Is accounted for similarly to product warranties. B. Creates an expense for...

Accounting for costs of incentive programs for customer purchases:

Accounting for costs of incentive programs for customer purchases:  A. Requires probability estimation. B. Follows the matching principle. C....

Paul Company issues a product recall due to an apparently pre-existing and material defect discovered after the end of its fiscal year. Financial statements have not yet been issued. The action required of Paul Company for this reasonably estimable contingency for the year just ended is:

Paul Company issues a product recall due to an apparently pre-existing and material defect discovered after the end of its fiscal year. Financial statements...

A loss contingency should be accrued in a company's financial statements only if the likelihood that a liability has been incurred is:

A loss contingency should be accrued in a company's financial statements only if the likelihood that a liability has been incurred is:  A....

Which of the following is a contingency that should be accrued?

Which of the following is a contingency that should be accrued?  A. The company is being sued and a loss is reasonably possible and reasonably...

A contingent loss should be reported in a footnote to the financial statements rather than being accrued if:

A contingent loss should be reported in a footnote to the financial statements rather than being accrued if:  A. The likelihood of a loss is...

A company should accrue a loss contingency only if the likelihood that a liability has been incurred is:

A company should accrue a loss contingency only if the likelihood that a liability has been incurred is:  A. More likely than not and the amount...

Gain contingencies usually are recognized in a company's income statement when:

Gain contingencies usually are recognized in a company's income statement when:  A. Realized. B. The amount can be reasonably estimated. C. The...

Footnote disclosure is required for material potential losses when the loss is at least reasonably possible:

Footnote disclosure is required for material potential losses when the loss is at least reasonably possible:  A. Only if the amount is known. B....

Other things being equal, most managers would prefer to report liabilities as noncurrent rather than current. The logic behind this preference is that the long-term classification permits the company to report:

Other things being equal, most managers would prefer to report liabilities as noncurrent rather than current. The logic behind this preference is that...

Branch Company, a building materials supplier, has $18,000,000 of notes payable due April 12, 2012. At December 31, 2011, Branch signed an agreement with First Bank to borrow up to $18,000,000 to refinance the notes on a long-term basis. The agreement specified that borrowings would not exceed 75% of the value of the collateral that Branch provided. At the date of issue of the December 31, 2011, financial statements, the value of Branch's collateral was $20,000,000. On its December 31, 2011, balance sheet, Branch should classify the notes as follows:

Branch Company, a building materials supplier, has $18,000,000 of notes payable due April 12, 2012. At December 31, 2011, Branch signed an agreement...

Kline Company refinanced current debt as long-term debt on January 5, 2012. Kline's fiscal year ended on December 31, 2011, and its financial statements will be issued sometime in early March, 2012. Under IFRS, how would Kline classify the debt on its December 31, 2011 balance sheet?

Kline Company refinanced current debt as long-term debt on January 5, 2012. Kline's fiscal year ended on December 31, 2011, and its financial statements...

Liabilities payable within the coming year are classified as long-term liabilities if refinancing is completed before date of issuance of the financial statements under

Liabilities payable within the coming year are classified as long-term liabilities if refinancing is completed before date of issuance of the financial...

On December 31, 2011, L, Inc. had a $1,500,000 note payable outstanding, due July 31, 2012. L borrowed the money to finance construction of a new plant. L planned to refinance the note by issuing long-term bonds. Because L temporarily had excess cash, it prepaid $500,000 of the note on January 23, 2012. In February 2012, L completed a $3,000,000 bond offering. L will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during 2012. On March 13, 2012, L issued its 2011 financial statements. What amount of the note payable should L include in the current liabilities section of its December 31, 2011, balance sheet?

On December 31, 2011, L, Inc. had a $1,500,000 note payable outstanding, due July 31, 2012. L borrowed the money to finance construction of a new plant....

A long-term liability should be reported as a current liability in a classified balance sheet if the long-term debt

A long-term liability should be reported as a current liability in a classified balance sheet if the long-term debt  A. is callable by the creditor. B....

Which of the following situations would not require that long-term liabilities be reported as current liabilities on a classified balance sheet?

Which of the following situations would not require that long-term liabilities be reported as current liabilities on a classified balance sheet?  A....

Large, highly rated firms sometimes sell commercial paper:

Large, highly rated firms sometimes sell commercial paper:  A. To borrow funds at a lower rate than through a bank. B. To earn a profit on the...

Of the following, which typically would not be classified as a current liability?

Of the following, which typically would not be classified as a current liability?  A. Estimated liability from cash rebate program. B. A long-term...

Short-term obligations can be reported as long-term liabilities if:

Short-term obligations can be reported as long-term liabilities if:  A. The firm has a long-term line of credit. B. The firm has tentative plans...

Which of the following is not a current liability?

Which of the following is not a current liability?  A. Accounts payable. B. A note payable due in 2 years. C. Accrued interest payable. D. Sales...

Slotnick Chemical received customer deposits on returnable containers in the amount of $300,000 during 2011. Fifteen percent of the containers were not returned. The deposits are based on the container cost marked up 20%. How much profit did Slotnick realize on the forfeited deposits?

Slotnick Chemical received customer deposits on returnable containers in the amount of $300,000 during 2011. Fifteen percent of the containers were...

In May of 2011, Raymond Financial Services became involved in a penalty dispute with the EPA. At December 31, 2011, the environmental attorney for Raymond indicated that an unfavorable outcome to the dispute was probable. The additional penalties were estimated to be $770,000 but could be as high as $1,170,000. After the year-end, but before the 2011 financial statements were issued, Raymond accepted an EPA settlement offer of $900,000. Raymond should have reported an accrued liability on its December 31, 2011, balance sheet of:

In May of 2011, Raymond Financial Services became involved in a penalty dispute with the EPA. At December 31, 2011, the environmental attorney for Raymond...

Clark's Chemical Company received customer deposits on returnable containers in the amount of $100,000 during 2011. Twelve percent of the containers were not returned. The deposits are based on the container cost marked up 20%. What is cost of goods sold relative to this forfeiture?

Clark's Chemical Company received customer deposits on returnable containers in the amount of $100,000 during 2011. Twelve percent of the containers...

When a product or service is delivered for which a customer advance has been previously received, the appropriate journal entry includes:

When a product or service is delivered for which a customer advance has been previously received, the appropriate journal entry includes:  A....

Peterson Photoshop sold $1000 of gift cards on a special promotion on October 15, 2011, and sold $1500 of gift cards on another special promotion on November 15, 2011. Of the cards sold in October, $100 were redeemed in October, $250 in November, and $300 in December. Of the cards sold in November, $150 were redeemed in November and $350 were redeemed in December. Peterson views the probability of redemption of a gift card as remote if the card has not been redeemed within two months. At 12/31/2011, Peterson would show an unearned revenue account for their gift cards with a balance of:

Peterson Photoshop sold $1000 of gift cards on a special promotion on October 15, 2011, and sold $1500 of gift cards on another special promotion on...

All else equal, a large increase in unearned revenue in the current period would be expected to produce what effect on revenue in a future period?

All else equal, a large increase in unearned revenue in the current period would be expected to produce what effect on revenue in a future period?  A....

Revenue associated with gift card sales should be recognized:

Revenue associated with gift card sales should be recognized:  A. When the gift card is sold. B. No later than the last day of the operating...

On January 1, 2011, G Corporation agreed to grant its employees two weeks vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2011, G's employees each earned an average of $800 per week. 500 vacation weeks earned in 2011 were not taken during 2011. Wage rates for employees rose by an average of 5 percent by the time vacations actually were taken in 2012. What is the amount of G's 2012 wages expense related to 2011 vacation time?

On January 1, 2011, G Corporation agreed to grant its employees two weeks vacation each year, with the stipulation that vacations earned each year can...

B Corp. has an employee benefit plan for compensated absences that gives employees 10 paid vacation days and 10 paid sick days. Both vacation and sick days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days; however, no payment is given for sick days not taken. At December 31, 2011, B's unadjusted balance of liability for compensated absences was $42,000. B estimated that there were 300 vacation days and 150 sick days available at December 31, 2011. B's employees earn an average of $200 per day. In its December 31, 2011, balance sheet, what amount of liability for compensated absences is B required to report?

B Corp. has an employee benefit plan for compensated absences that gives employees 10 paid vacation days and 10 paid sick days. Both vacation and sick...

When a deposit on returnable containers is forfeited, the firm holding the deposit will experience:

When a deposit on returnable containers is forfeited, the firm holding the deposit will experience:  A. A decrease in cost of goods sold. B....

All of the following but one represent collections for third parties. Which one of the following is not a collection for a third party?

All of the following but one represent collections for third parties. Which one of the following is not a collection for a third party?  A. Sales...

Lake Co. receives nonrefundable advance payments with special orders for containers constructed to customer specifications. Related information for 2011 is as follows ($ in millions): What amount should Lake report as a current liability for advances from customers in its Dec. 31, 2011, balance sheet?

Lake Co. receives nonrefundable advance payments with special orders for containers constructed to customer specifications. Related information for...

Which of the following generally is associated with accounts payable?

Which of the following generally is associated with accounts payable?  A. Option A B. Option B C. Option C D. Option D Answer: ...

M Corp. has an employee benefit plan for compensated absences that gives employees 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2011, M's unadjusted balance of liability for compensated absences was $30,000. M estimated that there were 200 vacation days available at December 31, 2011. M's employees earn an average of $150 per day. In its December 31, 2011, balance sheet, what amount of liability for compensated absences is M required to report?

M Corp. has an employee benefit plan for compensated absences that gives employees 15 paid vacation days. Vacation days can be carried over indefinitely....

At times, businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided. These customer advances represent:

At times, businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided....

On June 1, 2011, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $500,000 and a discount rate of 6%. What is the carrying value of the note as of September 30, 2011?

On June 1, 2011, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $500,000 and a discount rate of...

Oklahoma Oil Corp. paid interest of $785,000 during 2011, and the interest payable account decreased by $125,000. What was interest expense for the year?

Oklahoma Oil Corp. paid interest of $785,000 during 2011, and the interest payable account decreased by $125,000. What was interest expense for the...

Knique Shoes issued a $100,000, 8-month, "noninterest-bearing note." The loan was made by Second Commercial Bank whose stated "discount rate" is 9%. The effective interest rate on this loan (rounded) is:

Knique Shoes issued a $100,000, 8-month, "noninterest-bearing note." The loan was made by Second Commercial Bank whose stated "discount rate" is 9%....

Universal Travel Inc. borrowed $500,000 on November 1, 2011, and signed a 12-month note bearing interest at 6%. Interest is payable in full at maturity on October 31, 2012. In connection with this note, Universal Travel Inc. should report interest payable at December 31, 2011, in the amount of:

Universal Travel Inc. borrowed $500,000 on November 1, 2011, and signed a 12-month note bearing interest at 6%. Interest is payable in full at maturity...

On September 1, 2011, Hiker Shoes issued a $100,000, 8-month, noninterest-bearing note. The loan was made by Second Commercial Bank whose stated discount rate is 9%. Hiker's effective interest rate on this loan (rounded) is:

On September 1, 2011, Hiker Shoes issued a $100,000, 8-month, noninterest-bearing note. The loan was made by Second Commercial Bank whose stated discount...

What is the effective interest rate (rounded) on a 3-month, noninterest-bearing note with a stated rate of 12% and a maturity value of $200,000?

What is the effective interest rate (rounded) on a 3-month, noninterest-bearing note with a stated rate of 12% and a maturity value of $200,000?  A....

Jane's Donut Co. borrowed $200,000 on January 1, 2011, and signed a two-year note bearing interest at 12%. Interest is payable in full at maturity on January 1, 2013. In connection with this note, Jane's should report interest expense at December 31, 2011, in the amount of:

Jane's Donut Co. borrowed $200,000 on January 1, 2011, and signed a two-year note bearing interest at 12%. Interest is payable in full at maturity on...

On October 31, 2011, Simeon Builders borrowed $16 million cash and issued a 7-month, noninterest-bearing note. The loan was made by Star Finance Co. whose stated discount rate is 8%. Sky's effective interest rate on this loan is:

On October 31, 2011, Simeon Builders borrowed $16 million cash and issued a 7-month, noninterest-bearing note. The loan was made by Star Finance Co....

The rate of interest that actually is incurred on a note payable is called the:

The rate of interest that actually is incurred on a note payable is called the:  A. Face rate. B. Contract rate. C. Effective rate. D. Stated...

The rate of interest printed on the face of a note payable is called the:

The rate of interest printed on the face of a note payable is called the:  A. Yield rate. B. Effective rate. C. Market rate. D. Stated rate. Answer:...

A discount on a noninterest-bearing note payable is classified in the balance sheet as:

A discount on a noninterest-bearing note payable is classified in the balance sheet as:  A. An asset. B. A component of shareholders' equity. C....

When cash is received from customers in the form of a refundable deposit, the cash account is increased with a corresponding increase in:

When cash is received from customers in the form of a refundable deposit, the cash account is increased with a corresponding increase in:  A....

Classifying liabilities as either current or long-term helps creditors assess:

Classifying liabilities as either current or long-term helps creditors assess:  A. Profitability. B. The relative risk of a firm's liabilities. C....

The key accounting considerations relating to accounts payable are:

The key accounting considerations relating to accounts payable are:  A. Determining their existence and ensuring that they are recorded in the...

Current liabilities are normally recorded at the amount expected to be paid rather than at their present value. This practice can be supported by GAAP according to the concept of:

Current liabilities are normally recorded at the amount expected to be paid rather than at their present value. This practice can be supported by GAAP...

Current liabilities normally are recorded at their:

Current liabilities normally are recorded at their:  A. Present value. B. Cost. C. Maturity amount. D. Expected value. Answer: ...

Which of the following is not a liability?

Which of the following is not a liability?  A. An unused line of credit. B. Estimated income taxes. C. Sales tax collected from customers. D....

Which of the following is the best definition of a current liability?

Which of the following is the best definition of a current liability?  A. An obligation payable within one year. B. An obligation payable within...

Which of the following is not a characteristic of a liability?

Which of the following is not a characteristic of a liability?  A. It represents a probable, future sacrifice of economic benefits. B. It must...

The most common type of liability is:

The most common type of liability is:  A. One that comes into existence due to a loss contingency. B. One that must be estimated. C. One that...