Question;E13-3 The following;selected transactions relate to liabilities of United Insulation Corporation.;United's fiscal year ends on December 31.;Required: Prepare;the appropriate journal entries through the maturity of each liability.;2013;Jan.;13 Negotiated a revolving credit;agreement with Parish Bank that can be renewed annually upon bank approval. The;amount available under the line of credit is $20 million at the bank's prime;rate.;Feb.;1 Arranged a three-month bank loan of;$5 million with Parish Bank under the line of credit agreement. Interest at the;prime rate of 10% was payable at;maturity.;May;1 Paid the 10% note at maturity.;Dec.;1 Supported by the credit line, issued;$10 million of commercial paper on a nine-month note. Interest was discounted;at issuance at a 9% discount rate.;31 Recorded any necessary adjusting entry(s).;2014;Sept.;1 Paid the commercial paper at;maturity.;E13-11 An annual;report of Spring Corporation contained a rather lengthy narrative entitled;Review of Segmental Results of Operation." The narrative noted that;short-term notes payable and commercial paper outstanding at the end of the;year aggregated $756 million and that during the following year "This;entire balance will be replaced by the issuance of long-term debt or will;continue to be refinanced under existing long-term credit facilities.;Required: How;did Sprint report the debt in its balance sheet? Why?;E13-15 Cupola Awning;Corporation introduced a new line of commercial awnings in 2013 that carry a;two-year warranty against manufacturer's defects. Based on their experience;with previous product introductions, warranty costs are expected to approximate;3% of sales. Sales and actual warranty expenditures for the first year of;selling the product were;Sales Actual Warranty;Expenditures;$5,000,000;$37,500;Required: 1.;Does this situation represent a loss contingency? Why or why not? How should;Cupola account for it?;2.;Prepare journal entries that summarize sales of the awnings (assume all credit;sales) and any aspects of the warranty that should be recorded during 2013.;3. What;amount should Cupola report as a liability at December 31, 2013?;E13-17 Sound Audio;manufactures and sells audio equipment for automobiles. Engineers notified;management in December 2013 of a circuit flaw in an amplifier that poses a;potential fire hazard. An intense investigation indicated that a product recall;is virtually certain, estimated to cost the company $2 million. The fiscal year;ends on December 31.;Required: 1.;Should this loss contingency be accrued, disclosed only, or neither? Explain.;2. What;loss, if any, should Sound Audio report in its 2013 income statement?;3. What;liability, if any, should Sound Audio report in its 2013 balance sheet?;4.;Prepare any journal entry needed.;E13-27 Lee Financial;Services pays employees monthly. Payroll information is listed below for;January 2013, the first month of Lee?s fiscal year. Assume that none of the;employees exceeded any relevant wage base.;Salaries $;500,000;Federal income taxes to be withheld 100,000;Federal unemployment tax rate 0.60%;State unemployment tax rate (after FUTA deduction) 5.40%;Social Security (FICA) tax rate 7.65%;Required: Prepare;the appropriate journal entries to record salaries and wages expense and;payroll tax expense for the January 2013 pay period.
Paper#38688 | Written in 18-Jul-2015Price : $24