MGAB02H3 Lecture Notes - Lecture 4: Effective Interest Rate, Financial Statement, Income Tax
10 May 2018
School
Department
Course
Professor
Handout Q7:
Wage expense 65,950.00
Income tax payable 22,458.75
EI Payable 1,384.95
CPP Payable 3,097.93
Medical Insurance Payable 1,150.00
United Way Payable 1,319.00
Cash 36,539.37
CPP expense 3,097.93 the same as the employee
EI expense 1,938.93 1.4 x employee (1.4 x $ 1,384.95)
CPP Payable 3,097.93
EI Payable 1,938.93
Total expenses:
Wage 65,950.00
CPP 3,097.93
EI 1,938.93
70,986.86
EI Payable 3,323.88 ($ 1,384.95 + $ 1,918.93)
Cpp Payable 6,195.86 $ 3,097.93 x 2)
Income tax payable 22,458.75
Cash 31,978.49
Handout Q8:
Inventory 2,500.00
HST Receivable 325.00 $ 2,500 x 0.13
Accounts Payable 2,825.00 $ 2,500 x 1.13
CGS 1,200.00
Inventory 1,200.00
Acounts Receivable 4,181.00
HST Payable 481.00 $ 3,700 x 13%)
Sales 3,700.00
HST Payable 481.00
Cash 156.00
HST receivable 325.00
Handout Q9 - Warranties
Sales 1,000,000.00
Estimated warranty liability 10% of sales
100,000.00 $ 1,000,000 x 10%
Warranty expense 100,000.00
Estimated warranty liability 100,000.00
Actual claim 40,000.00
estimated warranty liability 40,000.00
cash/Inventory 40,000.00
Reconciliation - Estimated warranty liability:
Opening Balance
+ Warranty expense
- Actual Claim
= Ending balance
Handout Question 9:
Sales (units) 15,000.00
Estimated warranty liability 0.50%
75.00
Estimated warranty liability ($) 4,875.00 $ 65 x 75
Warranty expense 4,875.00
estimated warranty liability 4,875.00
Actual claim: (units) 52.00
Cost for actual claimes 3,380.00 $ 65 x 52
Estimated warranty liability 3,380.00
Inventory 3,380.00
reconciliation: Estimated Warranty Liability
Opening Balance 7,800.00
+ Warranty expense 4,875.00
- Actual claim (3,380.00)
= Ending Balance 9,295.00
Handout Q6:
Total cash received in November: Revenue recog
$ 20 x 4,700 94,000.00 7,833.33 ($ 94,000/12 x 1)
$ 30 x 1,900 57,000.00 2,375.00 ($ 57,000/24 x 1)
151,000.00 10,208.33
Contingencies:
Bonds
Face Value The amount that needs to be paid back by the issuer on maturity
Matuirty Date the date the bonds will be paid back
It also identifies the time period the bond holds
Interest Payment frequency How freuqent interests are getting paid
(monthly, quarterly, semi-annually or annually)
Document Summary
The amount that needs to be paid back by the issuer on maturity the date the bonds will be paid back. It also identifies the time period the bond holds. How freuqent interests are getting paid (monthly, quarterly, semi-annually or annually) This is the interest rate used to calculate the interest payments effective interest rate or yield. This means when calculating the pv of the bond, this is the inteers. This is also the interest rate to calculate the interest expense. Stated interest rate < market interest rate, the bond will be issued at a discount. Stated interest rate > market interest rate, the bond will be issued at a premium. Stated interest rate = market interest rate, the bond will be issued at par. Number of year for the bonds x interest payment periods per year. For a 10 year bond with interest payment semi-annually.
