Problem 1-1

Accounts payable including Deposits and advances 1,250,000

from customers, 250,000
Notes payable 1,000,000
Credit balance in customer's account 200,000
Serial bonds payable 1,000,000
Accrued interest on bonds payable 150,000
Unearned rent Income 100,000
Total current Liabilities 3,700,000

Problem 1-2

Notes payable - Trade 3,000,000

Notes payable - Bank loan 2,000,000
Notes payable - Advances from officer 500,000
Accounts payable - Trade 4,000,000
Bank draft 300,000
Dividends payable 1,000,000
Witholding tax payable 100,000
Income tax payable 800,000
Estimated warranty liability 600,000
Estimated damage payable 700,000
Acrrued liabilities 900,000
Estimated premium liability 200,000
Total current Liabilities 14,100,000

Problem 1-3

Current Liability - 3,000,000

Problem 1-4

Current liabilities
Accounts payable
Notes payable - Bank

Problem 1-5

Answer: A
Accounts payable 4,100,000
Accrued expenses 1,500,000
Credit balance in customer's account 500,000
Estimated liability for coupons 600,000
Total current Liabilities 6,700,000
Problem 1-6

Answer: B
Income taxes withheld from employess 900,000
Cash overdraft at harbor Bank 1,300,000
Credit balance in customer's account 750,000
Estimated expenses of meeting warranties 500,000
Estimated damage payable 1,500,000
Accounts payable 3,000,000
Accrued interest on bonds payable from Oct 1 to dec 31
( 5,000,000 x 12% x 3/12 ) 150,000
Total current Liabilities 8,100,000

Problem 1-7

Answer: B
Note payable - refinanced 5,000,000

Problem 1-8

Answer: C
Accounts payable 1,000,000
Debentures payable 500,000
Total current Liabilities 1,500,000

Problem 1-9

Answer: A
Accounts payable 1,500,000
Bank note payable 600,000
Interest payable ( 600,000 x 10% x 5/12 ) 25,000
Mortgage note payable 1,200,000
Rent payable ( 300,000 x 10/12 ) 250,000
Total current Liabilities 3,575,000
Problem 1-10

Answer: A
Notes payable 750,000

Problem 1-11

Answer: C
Notes payable 2,000,000
Less: Refinaced ( 1,500,000 x 80% ) 1,200,000
Total current Liabilities 800,000

Problem 1-12

Answer: B
Accounts payable 750,000
Short - term borrowings 400,000
Mortgage payable - current portion 100,000
Bank loan payable, due june 30, 2023 1,000,000
Total current Liabilities 2,250,000

Problem 1-13

Answer: D
Answer:
Unearned contract revenue ar january 1 600,000
Cash receipts from service contract sold 980,000
Total 1,580,000
Less: Service contract revenue recognized 860,000
Total unearned contract revenue 720,000
Problem 1-14

Answer: B
2023 150,000
2024 225,000
2025 100,000
Total 475,000

Problem 1-15

1. A
Solution:
600,000 x 40% x 1/2 120,000

2. B
Solution:
Total contract sold ( 1,000 x 600 ) 600,000
less: contract earned ( 240,000 x 1/2 ) 120,000
Deffered revenue 480,000

3. C
Solution:
Remaining one half of first contract ( 240,000 x 1/2 ) 120,000
First one half of second contract ( 360,000 x 1/2 ) 180,000
Contract revenue 300,000

4. C
Solution:
Remaining one half of second contract ( 360,000 x 1/2 ) 180,000
Problem 1-16

1. A
Solution:
(500,000 x40% x 1/2) 100,000

2. B
Solution:
Contract sold - 2022 500,000
Less: Contract earned (200,000 x 1/2) -100,000
Total unearned contract revenue of 2022 400,000

3. C
Solution:
Remaining of the First half of the first contract - 2022 ( 200,000 x 1/2) 100,000
Remaining of the first contract - 2022 ( 300,000 x 1/2) 150,000
First half of the second contract - 2023 ( 600,000 x 40% x 1/2) 120,000
Total contract revenue 370,000

4.A
Solution:
Contract sold in 2022 and 2023 1,100,000
less: Unearned contract revenue of 2022 -100,000
Unearned contract revenue of 2023 -370,000
Total unearned contract revenue of 2023 630,000

Problem 1-17
Answer: A
Monthly subscription ( 7,200,000/12) 600,000

Subscription received after the sept 30 cut offs are:

October 600,000
November 600,000
December 600,000
Deferred subscription revenue 1,800,000
Problem 1-18
Answer: B
Solution:
Subscription revenue 1,700,000
Cash receipts from subscribers 2,100,000
Total 3,800,000
Less: Subscription revenue recognized -1,500,000
Deferred subscription revenue 2,300,000

Problem 1-19
1. C
Solution:
Subscription revenue earned 2024 ( 125,000 + 200,000) 325,000
Subscription revenue earned 2025 140,000
Unearned subscription revenue in 2023 465,000

2. C
Solution:
Subscription revenue earned 2023 ( 155,000 + 130,000) 285,000

Problem 1-20
Answer: C
Solution:
Deposits in 2021 430,000
Less: Containers returned -250,000 180,000
Total

Deposits in 2022 780,000

Less: Containers returned -286,000 494,000
Total liability for container deposits 674,000

Problem 1-21
Answer:
Solution:
Deposits collected 700,000
Containers held 330,000
1,030,000
Less:
Refunded -410,000
Deposits forfeited -25,000
Total liability for refundable and deposits 595,000
Problem 1-22
Answer: C
Solution:
Customer advances - beg 1,180,000
Advances received with orders 1,840,000
Total 3,020,000
Less:
Advances applied to orders shipped -1,640,000
Advances applicable to orders cancelled -500,000
Total current liability for advances 880,000

Problem 1-23
Answer:C
Solution:
Total initial payments 990,000
Multiply the unearned months x 8/12
Deferred revenue 660,000

Problem -1-24

Requirements 1
Solution:
B = ( 5,250,000 x 5%)
B = 262500

Requirements 2
Solution:
B = 5,250,000 - ( 5,250,000/105% )
B = 5,250,000 - 5,000,000)
B = 250,000

Requirements 3
Solution:
B = 0.05 (5,250,000 - B ) 0.25 ( 5,250,000 - B)
B = 0.05 (5,250,000 - B ) 1,312,500 + 0.25B )
B = 262,500 - 0.05 - 65, 625 - B + 0.0125B )
B + 0.05 - 0.0125B B = 262,500 - 65,625
1. 0375 B = 196,875
B = 196,875/1.0375
B = 189,759
Requirements 4
Solution:
B = 0.05 (5,250,000 - B ) 0.25 ( 5,250,000 - B)
B = 0.05 (5,250,000 - B ) 1,312,500 + 0.25B )
B = 262, 500 - 65,625 + 0.0125
B - 0.0125 B = 262,500 - 65,625
0.9875 B = 196,875
B = 196,875/0.9875
B = 199,367

Problem 1-25
Answer: A
Solution:
Income after bonus and tax ( 300,000/10% ) 3,000,000
Income before tax ( 3,000,000/75%) 4,000,000
Add: Bonus 300,000
Income before bonus and tax 4,300,000

Problem 1-26
Answer: C
Income after bonus but before tax
B = ( 8,000,000 - 5,000,000)/125%
B = 3,000,0000 / 125%
B = (2,400,000 ) ( 25%)
B = 600,000