Exam 11: Current Liabilities and Contingencies

A company purchases inventory on credit for $40,000.Inventory costing $30,000 is sold on credit for $50,000.The applicable HST rate is 10%.Sales taxes are remitted on a monthly basis.Prepare the necessary journal entries for this transaction.

For the following transaction,provide all of the required journal entries from inception to liquidation.Assume a December 31 year end and that the company does not prepare interim statements.Round all amounts to nearest dollar.

Which statement about sales taxes is correct?

Which statement is not correct?

A company purchases inventory on credit for $80,000.Inventory costing $30,000 is sold on credit for $40,000.The applicable HST rate is 10%.Sales taxes are remitted on a monthly basis.Prepare the necessary journal entries for this transaction.

Which of the following characteristic is required for a "liability" under IFRS Framework?

How are "purchase discounts lost" reported in the financial statements?

LMZ Computer Systems Inc.maintains office equipment under contract.The contracts are for labour only; customers must reimburse LMZ for parts.LMZ's rate schedule follows: LMZ's 2018 sales of maintenance agreements is set out below: Requirements: Assuming that sales occurred evenly through the year: a.What amount of revenue will LMZ recognize for the year ended December 31,2018? b.What amount of deferred revenue will LMZ report as a current liability on December 31,2018? c.What amount of deferred revenue will LMZ report as a non-current liability on December 31,2018?

Which is not an example of a financial liability?

Which of the following is correct about a "liability" under IFRS Framework?

Which statement about warranties is correct?

Sales made in fiscal 2012 for $50,000,000 include a 5 year warranty coverage.The estimated cost for warranty is expected to be 2% for the first 4 years and 5% for the last year.Determine how much warranty expense will be recorded in fiscal 2012.

For a $200,000 trade payable with terms of 2/15,net 50,how much would be reported as "purchase discount lost" under the net method if a payment was made after 60 days?

For a $100,000 trade payable with terms of 2/10,net 45,how much would be reported as "purchase discount lost" under the gross method if a payment was made after 60 days?

Which is a non-current liability?

Explain how commitments and guarantees are accounted for under accrual accounting.

It is early in February 2017 and you are conducting the audit of Blast Off Airline's 2016 financial statements.Through discussion with Blast Off's Chief Financial Officer you learn of matters that have not yet been incorporated into the 2016 financial statements: In July 2016,127 passengers on board Blast Off Airlines Flight 007 were seriously injured when the plane missed the runway on final approach.In January 2017,the injured passengers launched a class action lawsuit against Blast Off seeking damages of $15 million.Blast Off's internal investigation of the incident determined that the pilot was intoxicated during the flight.The company's solicitors suggest that if the matter goes to court,Blast Off will be found liable and ordered to pay the $15 million. In an attempt to reduce its loss,Blast Off's solicitors made a settlement offer of $10 million to the plaintiffs.The litigants' attorney has not provided a formal response but has indicated that the offer is being seriously considered.Blast Off's lawyers estimate that there is a 90% probability the plaintiffs will accept the offer. Requirement: Prepare the journal entries to record the required adjustments for the above event.

Which statement about contingencies is correct?

Which statement about sales taxes is correct?

Which of the following is not correct?