pt vurvus jourhlal eñtry to record its estimated warranty liabilities (provision

Question

pt vurvus jourhlal eñtry to record its estimated warranty liabilities (provisions) for Assume those costs involve replacements taken out of inventory, with no cash involved. 2. Prepare Volvo's journal entry to record its costs (utilizations) related to its warranty program for 3. How much warranty expense does Volvo report for 2014? connect PROBLEM SET A Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017 2016 Problem 11-1A Short-term notes payable Apr. 20 Purchased S40,250 of merchandise on credit from Locust, terms n/30. Tyrell uses the pere ual inventory system. Replaced the April 20 account payable to Locust with a 90-day. $35.000 note bearing l annual interest along with paying $5,250 in cash. Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9% interest-bearing note with face value of $80,000. Paid the amount due on the note to Locust at the maturity date. transactions and entries P1 May 19 July 8 ,-- Nov. 28 Dec. 31 2017 Paid the amount due on the note to NBR Bank at the maturity date. Borrowed $42.000 cash frorn Fargo Bank by signing a 60-day, 8% interest-bearing note with i face value of $42,000 Recorded an adjusting entry for accrued interest on the note to Fargo Bank. Paid the amount due on the note to Fargo Bank at the maturity date Required 1. Determine the maturity date for each of the three notes described. 2. Determine the interest due at maturity for each of the three notes. (Assume a 360-day year.) 3. Determine the interest expense to be recorded in the adjusting entry at the end of 2016. 4. Determine the interest expense to be recorded in 2017. 5. Prepare journal entries for all the preceding transactions and events for years 2016 and 2017 (2) Locust, $875 (3) $308 (4) $252 Check

Explanation / Answer

1) Maturity date locust NBR fargo date of the note 19-May 8-Jul 28-Nov term of note 90 120 60 maturity date 17-Aug 5-Nov 27-Jan 2) interest due at maturity principal * Rate * time = interest locust 35,000 * 10% * 90/360 = 875 NBR 80,000 * 9% * 120/360 = 2400 Fargo 42,000 * 8% * 60/360 = 560 3) Amount in adjusting entry 42,000*8%*33/360 308 principal * Rate * time = interest interest to be acccrued 42,000 * 8% * 33/360 = 308 4) interest expense to be recorded in 2017 560-308 252 principal * Rate * time = interest interest to recorded in 2018 42,000 * 8% * 27/360 = 252 Journal entries Date Accounting titles & Explanations Debit Credit 20-Apr inventory 40,250 Accounts payable 40,250 19-May Accounts payable 40,250 cash 5,250 notes payable 35,000 8-Jul Cash 80,000 notes payable 80,000 17-Aug notes payable 35,000 interest expense 875 cash 35,875 5-Nov notes payable 80,000 interest expense 0 2,400 cash 82,400 28-Nov Cash 42,000 notes payable 42,000 31-Dec interest expense 308 interest payable 308 2017 27-Jan notes payable 42,000 interest payable 308 interest expense 252 cash 42,560

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