ACCT1511 QUIZ 1
Lecture Workshop
QUESTION 1 (PART A)
CoinRich Ltd. manufactures plastic toy coins, targeting board-game companies. Their toy coins are known for the delicate resemblance to real coins.
Required: In each of the following cases,
(a) calculate the year-end liability and any associated expenses for the year (if any), and (b) journalise the transaction.
(1) CoinRich Ltd. issued 1000, $100 bonds but found that the bond interest rate was lower than market rates, and so received $98 cash for each.
(a) Year-end liability and expenses for the year:
Liabilities: $98000
Expenses: $0
(b) Journal entries:
Dr Cash $98000
Dr Bond Discount (Contra-Liabilities) $2000
Cr Bond $100,000
(2) Ten board game companies ordered goods and sent $70,000 to CoinRich Ltd in advance. By the end of the year, CoinRich Ltd has corresponded to only
$60,000 of the fees. The rest will be corresponded next year. Cost of goods sold is recognised at 50% of the sales.
(a) Year-end liability and expenses for the year:
Liabilities: $10,000
Expenses: $30,000
(b) Journal entries:
Dr Cash $70,000
Cr Unearned Revenue/Deposit $70,000
Dr Unearned Revenue/Deposit $60,000
Cr Sales Revenue $60,000
Dr COGS $30,000
Cr Inventory $30,000
(3) CoinRich Ltd.’s has a warranty plan. The estimated warranty liability is 10% of cost of goods sold, and cost of goods sold for this year was $30,000. By the year end, $1000 of the warranty costs was actually incurred. Assume that the company did not replenish the warranty reserve after it is used.
(a) Year-end liability and expenses for the year:
Liabilities: $2,000
Expenses: $3,000
(b) Journal entries:
Dr Warranty Expense $3,000
Cr Provision for warranty $3,000
Dr Provision for warranty $1,000
Cr Cash $1,000
PART B)
(4) The following note was included in financial statements for CoinRich Ltd:
Note 19. Contingent liabilities:
The company was sued by FakeCoin Ltd... for the company’s alleged wilful and deliberate violation of a
QUESTION 1 (PART A)
CoinRich Ltd. manufactures plastic toy coins, targeting board-game companies. Their toy coins are known for the delicate resemblance to real coins.
Required: In each of the following cases,
(a) calculate the year-end liability and any associated expenses for the year (if any), and (b) journalise the transaction.
(1) CoinRich Ltd. issued 1000, $100 bonds but found that the bond interest rate was lower than market rates, and so received $98 cash for each.
(a) Year-end liability and expenses for the year:
Liabilities: $98000
Expenses: $0
(b) Journal entries:
Dr Cash $98000
Dr Bond Discount (Contra-Liabilities) $2000
Cr Bond $100,000
(2) Ten board game companies ordered goods and sent $70,000 to CoinRich Ltd in advance. By the end of the year, CoinRich Ltd has corresponded to only
$60,000 of the fees. The rest will be corresponded next year. Cost of goods sold is recognised at 50% of the sales.
(a) Year-end liability and expenses for the year:
Liabilities: $10,000
Expenses: $30,000
(b) Journal entries:
Dr Cash $70,000
Cr Unearned Revenue/Deposit $70,000
Dr Unearned Revenue/Deposit $60,000
Cr Sales Revenue $60,000
Dr COGS $30,000
Cr Inventory $30,000
(3) CoinRich Ltd.’s has a warranty plan. The estimated warranty liability is 10% of cost of goods sold, and cost of goods sold for this year was $30,000. By the year end, $1000 of the warranty costs was actually incurred. Assume that the company did not replenish the warranty reserve after it is used.
(a) Year-end liability and expenses for the year:
Liabilities: $2,000
Expenses: $3,000
(b) Journal entries:
Dr Warranty Expense $3,000
Cr Provision for warranty $3,000
Dr Provision for warranty $1,000
Cr Cash $1,000
PART B)
(4) The following note was included in financial statements for CoinRich Ltd:
Note 19. Contingent liabilities:
The company was sued by FakeCoin Ltd... for the company’s alleged wilful and deliberate violation of a