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Homework answers / question archive / Stone, Inc
Stone, Inc., sells its products with a one-year warranty. The estimated product warranty is 4% of sales. Assume that Stone had sales of $172,000 during January this year. On February 25, a customer received warranty repairs requiring $64 of labor and $38 of parts.
Required:
Record the adjusting entry to accrue warranty expense on January 31.
Record the journal entry for the warranty work provided in February.
Account Title Debit Credit
Problem 2 (8.5 points)
Assume, that on March 8, 2021, Starbucks Corporation, borrowed $440 million cash from JP Morgan Chase to meet short-term obligations. Starbucks signed a 6% note and promised to repay the $440 million in 150 days. All interest will be paid when the note is due. Assume the company records only the two entries: borrowing and payment. Use 360-day year and round your answer to the nearest dollar.
Required:
Find the maturity date of the note. Maturity date is:
Record the issuance of the note on March 8.
Record payment of the note and interest at maturity.
Account Titles Debit Credit
1) Journal Entries:
|
Date |
Account Title and Explanation |
Debit |
Credit |
|
Jan. 31 |
Warranty Expense ($172,000*4%) |
$6,880 |
|
|
Estimated Warranty Liability |
$6,880 |
||
|
(To record warranty expense accrued) |
|||
|
Feb. 25 |
Estimated Warranty Liability |
$102 |
|
|
Cash / Wages Payable |
$64 |
||
|
Repairs Inventory |
38 |
||
|
(To record warranty claim honored) |
2) Journal Entries:
|
Date |
Account Title and Explanations |
Debit (in millions) |
Credit (in millions) |
|
|
Mar. 8 |
Cash |
$440 |
||
|
Notes Payable |
$440 |
|||
|
(To record short term note issued) |
||||
|
Aug. 5 |
Notes Payable |
$440 |
||
|
Interest Expense |
$11 |
=440*6%*150/360 |
||
|
Cash |
$451 |
|||
|
(To record note repaid with interest) |
