3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against product defects. Experienc

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3 Jansen Company Sells A Product For 400 Per Unit Which Includes A 30 Day Warranty Against Product Defects Experienc 1 (43.67 KiB) Viewed 22 times

3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against product defects. Experience indicates that four percent of the units sold will prove defective, requiring an average repair cost of $50 per unit. During the first month of business, product sales were $320,000, and 20 of the units sold were found to be defective and repaired during the month. What is the accrued liability for product warranties at month-end? a $1,000 b. $600 C. $1,600 d. $2,000 4. Which of the following payroll related taxes are not withheld from an employee's earnings? a. Medicare taxes b. Income taxes C. Federal unemployment taxes d. Social Security taxes 5. Which of the following is not considered to be a contingent liability? Environmental cleanup costs a. b. Notes payable c. Credit guarantees d. Lawsuit 6. On May 1, 2013, a firm issued $400,000 of 12-year, nine percent bonds payable at 96 1/2 plus accrued interest. The bonds are dated January 1, and interest is payable on January 1 and July 1 of each year. The amount the firm receives on May 1 from the sale of the bonds (see Appendix 10A) is: a $386,000. b. $422,000. C $392,000. d. $398,000. 7. A firm issued $250,000 of ten-year, 12 percent bonds payable on January 1, for $281,180, yielding an effective rate of ten percent. Interest is payable on January 1 and July 1 each year. The firm records amortization on each interest date. Bond interest expense for the first six months using effective interest amortization (see Appendix 10A) is: a $15,000. b. $16,871. c. $14,059, d. $14.331. 8. In financial statement presentations, the Discount on Bonds Payable account is: a. Added to Bond Interest Expense. b. Deducted from Bonds Payable. G. d. Added to Bonds Payable. Deducted from Bond Interest Expense. 9. An example of off-balance-sheet financing is a(n): a. Term loan. b. c. d. Capital lease. Operating lease. Zero-coupon bond. 10. Apolo Company reported year-end current assets of $75,000 and current liabilities of $25,000. The company's current ratio is: a 1/3 b. 3 C. 4. d. $50,000 11. Cristo Company reported net income of $50,000 after subtracting $10,000 for interest expense and $20,000 for taxes. Compute the company's times-interest-earned ratio: 2.5 b. 5 c. 8 d. 3