96. For each of the following independent situations prepare the adjusting entry that would be required at year-end. Assume a December 31 year-end for all cases.
A) On September 1 a company issued at par a $500,000 8% semi-annual coupon bond, interest payable on February 28 and August 31.
B) A company leases retail space in a mall. The lease calls for monthly payments to be made on the first of the month of $5,000, plus 1% of sales to be paid quarterly 15 days after the end of the quarter. The sales for the last quarter of the year were $375,400.
C) A company sells a product with a six-month warranty. Warranty costs are estimated to be 1.5% of sales. The company has not recorded their estimate for the expense on the current year's sales of $2,500,000 but has paid $27,000 in warranty claims during the year.
D) A company estimated its income tax expense to be $525,000 for the year. To date they have made instalment payments of $400,000.
E) A company has a 5-year term loan of $250,000 outstanding with a bank. Interest is charged at 5% and paid on the first day of each quarter. The annual payment of $50,000 is due January 1.
97. Panorama Properties reported the following account balances and events at their September 30, 2014 year-end. None of the year-end adjusting entries have been made.
$42,000 Amounts owing to suppliers
$33,700 Amount outstanding on the line of credit, estimated interest owing $225.
$18,750 Amounts withheld from employee paycheques to be remitted Oct 10.
$500,000 Bonds outstanding, 6% semi-annual coupon.
$24,600 Unamortized portion of bond premium. The last coupon was paid September 30
$135,700 Amount of shortfall of pension assets relative to pension obligations at year-end.
$125,000 Balance outstanding on mortgages. Next payment, due October 1, consists of $1,042 of interest and $1,458 of principal. The next 12 months payments (including the one due October 1) will total $30,000 of which $16,500 will be applied to the principal.
$22,400 Rent payments received in advance from tenants for October.
Required:
Prepare the liability section of their balance sheet as at September 30, 2014 including the effects of any required adjustments.