Midterm 1 Cards Flashcards
(34 cards)
What obligations are listed under current liabilities
Liabilities that are expected to mature within a year or the next accounting cycle
When are gain contingencies recorded
Never. They are disclosed in the footnotes when there is a high probability for realizing them
Can you record loss contingencies on potential events
No. The event must have already occured
What conditions are necessary to recognize and asset retirement obligation
Existing legal obligation and you can reasonably estimate the amount of the liability
What is the journal entry for an employer’s payroll tax expense
Debit payroll tax expense
Credit FUTA, SUTA, and FICA payable
How do you record a warranty liability
Debit warranty expense
Credit warranty liability
When is a bond trading at a discount or premium
Discount is when the market rate is higher than the coupon rate
Premium is when the market rate is lower than the discount rate
What is the formula for the effective interest rate method
CV*(Market rate/Compounding periods)
Do cash interest payments change for bonds
No. Use to plug amortization
How do you record a loss on extinguishment of a bond
Debit loss on extinguishment of bond and bonds payable
Credit D/c on bonds payable and cash
How do you record a gain on extinguishment of a bond
Debit bonds payable and premium on bp
Credit cash and gain on extinguishment
How do you record an unrealized holding change for notes payable
For loss debit unrealized holding loss - equity and credit notes payable
For gain debit notes payable and credit unrealized holding gain - equity
A corporation uses FMV to value a note payable, how would this affect net income
If the value of the note payable decreases net income increases
If the value of the note payable increase net income decreases
How do you record issuing a notes payable for equipment
Debit Equipment
Credit notes payable
How to record premium liability at the end of a period
Debit premium expense and credit premium liability
How to record the redemption of premiums
Debit premium expense
Credit premium inventory or cash
How to record the purchase of premium inventory
Debit Premium Inventory
Credit Cash
How to record the sale of a service warranty
Debit cash
Credit unearned warranty revenue
How to charge inventory and labor under assurance warranty
Debit warranty liability
Credit inventory and S&W payable
How do you record the expected liability of assurance warranty
Debit warranty expense
Credit warranty liability
What are the two types of warranties
Assurance warranty which is based on meeting the agreed specifications of a product
Service warranty provides additional service beyond assurance
How do you record asset retirement obligations
Debit land improvement
Credit asset retirement pbligation
How do you record the extinguishment of an asset retirement obligation
Debit ARO
Credit Cash
For a gain/loss plug the entry
How do you record a transaction with sales tax
Debit cash
Credit sales tax payable and service revenue
