LIABILITIES

Glare Company
 Total Current Liabilities – 3, 700, 000

Easy Company
 Total Current Liabilities – 4, 100, 000

Manchester Company
 Total Current Liabilities – 8, 100,000

Multiple Company
 Total Current Liabilities – 2, 450, 000
 Total Noncurrent Liabilities – 2, 000, 000

Cordillera Company
 Current Liability – 3, 000, 000
 Current Liability – 6, 000, 000
 Noncurrent Liability – 4, 000, 000
 Current Liability – 5, 000, 000

Intercon Company
 Total Liabilities – 30, 000, 000

Cavalier Company
 Total Current Liability – 15, 650, 000

Burma Company
 Current Liability at the year-end – 6, 700, 000
Gar Company
 Current Liabilities – 3, 900, 000

Able Company
 Current Liabilities – 130, 000

Achilles Company
 Notes Payable as Current – 5, 000, 000 NOT SURE

Eliot Company
 Current Liabilities – 1, 500, 000

Largo Company
 Current Liabilities – 750, 000

Dean Company
 Current Liabilities – 800, 000

Willem Company
 Current Liabilities – 2, 250, 000

Cobb Company
 Unearned Revenue at the year-end – 850, 000

Regal Company
 Unearned Revenue – 1, 250, 000

Greene Company
  Unearned Service Contract Revenue – 480, 000

Ryan Company
 Not sure 400, 000

Anette Video Company

 Unearned Subscription Revenue – 465, 000
 Subscription Revenue for 2021 – 285, 000

Farr Company
 Liability for deposits – 337, 000

Black Company
 Current Liability for Advances – 880, 000

Kent Company
 Escrow Accounts Liability – 605, 000

Bell Company
 Escrow Liability – 450, 000

Nature Company
 Income Before Bonus Before Tax – 262, 500
 Income After Bonus Before Tax – 250, 000
 Income After Bonus After Tax – 117, 536
 Income After Tax Before Bonus – 186, 548

Ronald Company
 Bonus for the Current Year – 150, 000
Christian Company
 Income before bonus and Tax – 4, 280, 000

Gretchen Company
 Bonus for the Current Year – 120, 000

Most Relevant Measurement of Liabilities @ initial Recognition – THE CREDIT

STANDING OF AN ENTITY

Best Describe the term liability – PRESENT OBLIGATION ARISING FROM PAST
EVENT

Relationship between PV and concept of a liability – PV IS USED TO MEASURE

CERTAIN LIABILITIES

Long term debt becomes callable – DEBT CLASSIFIES AS CURRENT

Debt callable by creditor – CURRENT LIABILITY

Advance payments from customer represent – LIABILITIES UNTIL THE PRODUCT IS

PROVIDED

Revenue associated with gift card sales should be recognized – WHEN PROBABLY GIFT
CARD REDEMPTION IS VIEWEDAS REMOTE

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? – LARGE INCREASE
BECAUSE UNEARNED REVENUE BECOMES REVENUE WHEN EARNED
When a product is delivered for which a customer advance has been previously received,
the appropriate journal entry includes – DEBIT TO LIABILITY AND CREDIT TO
REVENUE
When cash received from customers in the form of refundable deposit, the cash account is
increased with a corresponding increase in – CURRENT LIABILITY

A departments store received cash and issued a gift certificate that is redeemable in
merchandise. When is the gift certificate issued – DEFFERED REVENUE SHOULD BE
INCREASED

A retail store received cash and and issued a gift certificate that is redeemable in
merchandise. How would the deferred revenue account be affected by the redemption and
non-redemption of certificates, respectively? – DECREASE AND DECREASE

An entity received an advance payment for special order goods that are to be
manufactured and delivered without six months. How should the advance payment be
reported – CURRENT LIABILITY

At the year-end, an entity sold refundable merchandise coupons. The entity received a
certain amount for cash coupon redeemable next year for merchandise with a certificate
retail price. At the year end, hoe should the entity report those coupon transactions? –
UNEARBED REVENUE AT THE CASH RECEIVED

Proceeds from advance sale of non refundable tickets – UNEARNED REVEMUE FOR
THE ENTIRE PROCEEDS

Magazine subscriptions collected in advance – DEFFERED OBLIGATION IN THE

LIABILITY SECTION

Under loyalty agreement, received loyalties from the assignment of a patent for four years.
The royalties received in advance should be reported as revenue – IN THE PERIOS
EARNED
Retail of home appliances offers a service contract in aech appliance sold. Collections
received for service contract should be recorded as increase in –DEFERRED REVENUE
ACCOUNT

Sekls appliance that include in a 3 year warranty. Whne should the entity recognize these
warranty costs? – WHEN THE MACHINES ARE SOLD

Advance payment of 60% - DEFFERED REVENUE EQUAL TO 60%OF THE MAIN

CONTRACT PRICE AND NO PAYABLE TO SUB CONTRACTOR

PREMIUM LIABILITY
MILL COMPANY
 Premium expense for 2020 – 384, 000
 Premium claims outstanding on December 31, 2020 – 224, 000

Day Company
 Premium expense for 2020 – 6, 000, 000
 Liability for unredeemed coupons – 1, 500, 000

Topsy Company
 Year-end Estimated Liability – 1, 500, 000

Cereal Company
 Liability for coupons n December 31, 2020 – 350, 000

Curran Company
 Premium expense for 2020 – 462, 000
 Liability for unredeemed coupons – 242, 000
Milan Company
 Estimated Liability for coupons – 396, 000

Blake Company
 Liability for unredeemed coupons December 31, 2020 – 915, 000

Clam Company
 Premium Expense for the current year – 2, 025, 000
 Outstanding premiums at year end – 375, 000

Baker Compay
 Estimate Liability at year-end – 750, 000

Charlene Company
 Premium expense on 2020 – 2, 700, 000
 Premium liability on December 31, 2020 - 900, 000
 Premium expense for 2021 – 3, 375, 000
 Premium liability on December 31, 2021 – 1, 125, 000

Love Company
 Premium expense on 2020 – 1, 000, 000
 Premium liability on December 31, 2020 - 200, 000
 Premium expense for 2021 – 1, 920, 000
 Premium liability on December 31, 2021 – 120, 000

Deluxe Company
 Estimated Rebate Liability – 1, 050, 000

Jolly Company
 Rebate expense for the current year – 170, 000
James Company
 Allocated to the points – 1, 020, 000
 Loyalty points for 2020 – 489, 600
 Revenue earned for loyalty points – 224, 400

William Company
 Revenue points for 2020- 600, 000
 Reveue from points for 2021 – 200, 000

Cost of customer premium offer should be charge to expense – WHEN THE RELATED
PRODUCT IS SOLD

Accounting concept that requires recognition of liability for customer premium offer is –
MATCHING PRINCIPLE

Accounitng for cost incentive program for frequent customer purchases involves -
RECORDING AN EXPENSE AND A LIABILITY EACH PERIOD

Accounting for cost incentive program for customer purchases – REQUIRES

PROBABILITY ESTIMATTION, FOLLOWS THE MATHCINH PRINCIPLE, IS A
LOSS CONTINGENCY SITUATION

Providing a monetary rebate program – ALL CORRECT

WARRANTY LIABILITY
Hanna Company
 Warranty expenditures during the year – 1, 700, 000

Pink Company
  Warranty expenditures incurred for the current byear – 2, 040, 000

Carpet Company
 Warranty Liability Account on Dec. 31, 2020 – 700, 000

Mile Company
 Warranty Expense – 720, 000
 Warranty Liabilty at year end – 550, 000

Bold Company
 Warranty expense for the current year – 80, 000
 Warranty Liabiltiy at year-end- 90, 000

Ash Company
 Warranty expense fir 2020 – 2, 400, 000
 Estimated Warranty Liabiltiy – 1, 700, 000

Villa Company
 Net Sales CR – 8M

Dubious Company
 Warranty expense for 2020 – 350k
 Warranty Liability on dec, 31 2020- 250k
 Warranty expense 2021 – 490k
 Warranty liability on dec 31, 2021 – 440k\

Accrua;l Approach - REPRESENTS ACCEPTED PRICE

Best describe accrual approach of accounting for warranty cost – EXPENSE BASE
ON ESTIMATE IN YEAR OF SALE
 Best describes as incurred approach – EXPENSED WHEN INCURRED

Classification of estimated warranty liability in 3 year warranty – PARTLY

CURRENT AND PARTLY NON CURRENT

Characteristic osf the accrual warranty but not sale of warramty – WARRANTY
LIAB

PROVISION CONTINGENT LIABILITY

Toyo Company
 Warranty provision – 3.5M

Chato Company
Warranty Provision – 300k

Odyssey Company
Undiscounted cash flow – 89, 880
Provision for law suit – 85, 386

Libya Company
Undiscounted Cash flow – 1, 382, 400
Provision on dec 31, 2020 – 1, 230, 336

NOTE PAYABLE
Joshua Company - 2, 160, 000
Mann Company – 180, 000
PARES COMPANY – NCOME STATEMENT – 306, 000
Roth Company – NP – 1M
Pine Company – Accrued interst payable –
Alpha Company – Accrued interest payable – 100k
When enetity issued a note solely - FACE AMOUNT DISCOUNTED
If presemt value of note issued in exchange for property less than face amount –
AMORTIZED AS INTEREST EXPENSE OVER THE LIFE OF THE NOTE

Borrowed cash from bank – MORE THSN THE STATED DISCOUNT RATE OF 10%

At issuance date, pv of promisory mote – BEARS A STATED RATE OF INTEREST

WHICH IS REALISTIC

Discount in note payable is incorrect – AMORTIZING THE DISCOUNT ON NOTE

PAYABLE GRADUALLY DECREASES THE CA OF THE LIAB OVER THE LIFE OF
THE NOTE

Note payable with no ready market in exchanged for peoprty – THE PV OF NP MUST BE
APPROXIMATED BECAUSE USING AN IMPUTED INTEREST RTE

NP is issued for property, pv is measured by - ALL OF THESE

NP is exchange for property – STATED INTERST IS EQUAL TO THE MR

The discount resulting determination of PV of NP should be reported as – DIRECT

DEDUCTIONFROM THE FACE AMOUNT OF THE NOTE

Statement is correct when entity issued NP with no stated interest rate – ASSET SHPULD
BE DEPRECIATED OVER THE TERM OF THE NOTE PAYABLE