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I have provided the anwser sheet and questions in the two attachments
9-11
Compute the times interest earned for weltin company, which reports income before interest expense and income taxes of 2,044,000 and interest expense of 350,000. Interpret its time interest earned (assume that its competitors average a times interest earned 4.0)
9-1A
9-2A
BTN 9-3
Chapter 9
Reporting and Analyzing
Current Liabilities
Quick Study 9-11 (10 minutes)
Times interest earned =
=
Interpretation
:
PROBLEM SET A
Problem 9-1A (45 minutes)
Frier
Com. Bank
UMB
1.
Maturity dates
Date of the note
Term of the note (in days)
Maturity date
2.
Interest due at maturity
Principal of the note
Annual interest rate
Fraction of year
Interest expense
3.
Accrued interest on UMB note at the end of 2010
Total interest for note
Fraction of term in 2010
Accrued interest expense
4.
Interest on UMB note in 2011
Total interest for note
Fraction of term in 2011
Interest expense in 2011
5.
2010 You can show your calculations in your journal entry descriptions.
The terms regarding the notes payable should be in the descriptions as well
|
Apr. 20 |
Merchandise Inventory |
| Accounts Payable—Frier |
|
May 19 |
Accounts Payable—Frier | |
|
Cash |
||
|
Notes Payable—Frier |
||
|
. |
|
July 8 |
Cash |
||||||||
|
Notes Payable—Community |
|||||||||
|
|
|
Aug. 17 |
Interest Expense |
|||
|
Notes Payable—Frier |
|
Nov. 5 |
|
Notes Payable—Community |
|
28 |
|
Notes Payable—UMB Bank |
|
Dec. 31 |
|
Interest Payable |
2011
|
Jan. 27 |
126 |
| Notes Payable—UMB Bank | |
|
Interest Payable |
|
| Cash |
Problem 9-2A (40 minutes) You can show your calculations in your journal entry descriptions.
1.
2010
|
Nov. 11 |
||
|
Sales |
|
11 |
Cost of Goods Sold |
||||
|
Merchandise Inventory |
|||||
|
30 |
Warranty Expense | |||
|
Estimated Warranty Liability |
|
Dec. 9 |
Estimated Warranty Liability |
|
16 |
|
29 |
|
31 |
|
Jan. 5 |
|
5 |
Cost of Goods Sold |
2011
|
17 |
2.
Warranty expense for November 2010 and December 2010
|
Sales |
Percent |
|
November |
|
|
December |
|
|
Total |
3.
Warranty expense for January 2011
| Sales in January |
|
Warranty percent |
|
Warranty expense |
4.
Balance of the estimated liability as of December 31, 2010
| Warranty expense for November |
credit |
||||
|
Warranty expense for December |
|||||
|
Cost of replacing items in December |
debit |
||||
|
Estimated Warranty Liability balance |
*Can be viewed as $270 + $540
5.
Balance of the estimated liability as of January 31, 2011
| Beginning balance |
|
Warranty expense for January |
|
Cost of replacing items in January |
|
Credit |
Ethics Challenge — BTN 9-3
1
2.
©McGraw-Hill Companies, 2013
472
Financial Accounting, 6th Edition
©McGraw-Hill Companies, 2013
471
Solutions Manual, Chapter 9
