7.Pacific Company estimates warranty expense as 10% of sales. On January 1, warranties payable was $10,000. During the year, Pacific paid $8,000 to meet its warranty obligations and recorded sales of $300,000. Calculate warranties payable on December 31.
8.On January 1 and December 31, warranties payable were $6,000 and $4,000, respectively. During the current year, sales were $100,000, upon which 3% was estimated to be the amount required for future warranty payments. Calculate the amount paid for warranties during the current year.
9.Beacon Incorporated owns a chain of retail stores. During December of 2009, a customer slipped in a doorway of its Virginia store and broke his ribs. He is suing Beacon for $200,000 for negligence. Beacon's legal counsel believes that it is remote that Beacon will lose its defense of the lawsuit because the doorway recently was rebuilt with all-weather traction stripping and a sign on the door warned customers that the doorway was slippery when icy. On December 30, 2009, before considering the effects of this lawsuit, Beacon's current assets, total assets, current liabilities, and total liabilities were $420,000, $840,000, $100,000, and $300,000, respectively. After this event is properly accounted for, calculate Beacon’s debt/asset ratio on December 31, 2009.
10.On December 31, 2009, Roper Company had current assets of $15,000 in cash and current liabilities of $8,000 in accounts payable, resulting in a current ratio of 1.88. The company needs to increase its current ratio to 2.75 by December 31, 2010. Calculate the amount of accounts payable that needs to be paid in order to boost the current ratio to 2.75.
11.On December 31, 2008, Seminole Co. had current assets of $25,000 in cash and current liabilities of $8,000 in accounts payable, resulting in a current ratio of 3.13. The company estimates that warranty expense for 2009 is 6% of sales that totaled $200,000. Calculate Seminole’s current ratio after warranty expense is recognized.