11-4B On November 10, 2016. Lee Co. began operations by purchasing coffee grinders for resale. Lee uses the perpetual inventory method. The grinders have a 60-day warranty that requires the company to replace any nonworking grinder. When a grinder is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company’s cost per new grinder is $24 and its retail selling price is $50 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 10% of dollar sales. The following transactions and events occurred.
2016
Nov. 16 Sold 50 grinders for $2,500 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 12 Replaced six grinders that were returned under the warranty.
18 Sold 200 grinders for $10,000 cash.
28 Replaced 17 grinders that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2017
Jan. 7 Sold 40 grinders for $2,000 cash.
21 Replaced 36 grinders that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.Required
1. Prepare journal entries to record these transactions and adjustments for 2016 and 2017.
3. How much warranty expense is reported for January 2017?
4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016?
5.What is the balance of the Estimated Warranty Liability account as of January 31, 2017?12 2B Bria Bell and Gil Green are forming a partnership to which Bell will devote one-third time and Green will devote full time. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments, which they have agreed will be $104,000 for Bell and $156,000 for Green; (b) in proportion to the time devoted to the business; (c) a salary allowance of $4,000 per month to Green and the balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $4,000 per month to Green, 10% interest on their initial capital investments, and the balance shared equally. The partners expect the business to perform as follows: year 1, $36,000 net loss; year 2, $76,000 net income; and year 3, $188,000 net income.
RequiredPrepare three tables with the following column headings. Year:______
Income (Loss)
Sharing Plan Calculations Bell GreenComplete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of the four plans being considered. (Round answers to the nearest whole dollar.)12 – 2A Irene Watts and John Lyon are forming a partnership to which Watts will devote one-halftime and Lyons will devote full-time. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments, which they have agreed will be $42,000 for Watts and $63,000 for Lyon; (b) in proportion to the time devoted to the business; (c) a salary allowance of $6,000 per month to Lyon and the balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $6,000 per month to Lyon, 10% interest on their initial capital investments, and the balance shared equally. The partners expect the business to perform as follows: Year 1, $36,000 net loss; Year 2, $90,000 net income; and Year 3, $150,000 net income. Required: Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of the four plans being considered. Year:
Income (Loss)
Sharing Plan Calculations Watts Lyon12 – 4A Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $67,500, $262,500, and $420,000, respectively. They predict annual partnership net income of $450,000 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $80,000 to Mo, $60,000 to Lu, and $90,000 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb.
1. Prepare a table with the following column headings. Use the table to show how to distribute net income of $450,000 for the calendar year under each of the alternative plans being considered. (Round answers to the nearest whole dollar.)