16.On December 31, 2009, Carlson Incorporated had total liabilities of $60,000 and total shareholders' equity of $100,000, resulting in a debt/equity ratio of 0.60 before warranty expense is recognized. On December 31, 2009, Carlson estimated warranty expense to be 5% of sales of $100,000. What is Carlson’s debt/equity ratio after the warranty expense and related liability is recognized?
17.On March 2, 2010, KnightCompany’s CFO, Bob Martin, will receive a bonus equal to 6% of net income before income taxes as reported for the year ended December 31, 2009. The current 2009 income statement shows net income before income taxes as $600,000.
Required:
(1) What journal entry should be made on December 31, 2009?
(2) What journal entry should be made on March 2, 2010?
(3) If Bob decides to postpone $50,000 of 2009 research and development expenditures until 2010, what impact would this have on his bonus? Explain and show your calculations.
18.On December 31, 2010, Stanley Co. had current assets of $20,000 (all cash) and current liabilities of $9,000 in accounts payable, resulting in a current ratio of 2.22. On December 31, 2010, Stanley purchases $6,000 of inventory on account. Calculate Stanley’s current ratio after the inventory has been purchased.