21 ragas inc sold goods with a selling price of 50 000 in the year 2013 and estimate 4306634

21 ragas inc sold goods with a selling price of 50 000 in the year 2013 and estimate 4306634

21) Ragas Inc. sold goods with a selling price of $50,000 in the year 2013 and estimated 4% warranty expense for the year. Customers complained of defects and goods with a cost of $1,500 had to be replaced. Which of the following is the correct journal entry for honoring the warranties with goods?

A)

Estimated Warranty Payable

1,500

       Cash

1,500

B)

Estimated Warranty Payable

1,500

       Merchandise Inventory

1,500

C)

Warranty Expense

1,500

       Merchandise Inventory

1,500

D)

Estimated Warranty Payable

1,500

       Warranty Expense

1,500

22) Royal Clothes has performed admirably for the financial year 2014. It decides to reward its employees with a bonus of 15% on annual net income, after deducting the bonus. The net income before allowing bonuses is $300,000. Calculate the bonus allowable to employees.

A) $45,000

B) $39,130

C) $52,941

D) $6,750

23) Tryst Inc. has a policy of accruing $1,500 for every employee as a vacation benefit. Sarah, an employee, took a vacation. Which of the following is the correct journal entry for the vacation benefit paid?

A)

Vacation Benefit Payable

1,250

       Vacation Benefit Expense

1,250

B)

Vacation Benefit Expense

1,500

       Cash

1,500

C)

Vacation Benefit Payable

1,500

       Cash

1,500

D)

Vacation Benefit Expense

1,250

       Vacation Benefit Payable

1,250

24) Paramount Inc. decided to reward its employees with a bonus of 7% on annual net income, after deducting the bonus. The company reported net income of $513,600 before the calculation of the bonus. Provide the journal entry to accrue employee bonus expense.

25) Northwest Inc. records indicate that January sales on account were $109,000. The company's management estimates warranty expense to be 3.6% of sales. Provide the journal entry to record warranty expense.

26) Felix Sales Inc. offers warranties on all its electronic goods. Warranty expense is estimated at 3.5% of sales revenue. In 2015, Felix had $333,000 of sales. In the same year, Felix paid out $8,750 of warranty payments. Provide the journal entry to record the warranty expense.

27) Felix Sales Inc. offers warranties on all its electronic goods. Warranty expense is estimated at 3.5% of sales revenue. In 2015, Felix had $333,000 of sales. In the same year, Felix paid out $8,750 of warranty payments. Provide the journal entry to record the disbursement of warranty payments.

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