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Financial Statement Analysis

A provision for warranty should be provided for at 2% and any changes is taken to the profit and loss account. An account should be maintained that has this figures and if there is returns then the actual amount and changes in the provision is taken to the profit and loss account. b. Calculate K2’s warranty expense for 2008. Opening balance 8,430,000 Provision 2% of 1,934,700,000 38, 694,000 47, 124,000 Closing balance 6,490,000 Warranty expense for the period 40,634,000 c. How much did K2 pay during the year to repair and or replace goods under warranty? Amount paid for repairs =50% of warranty Amount paid for repairs =50% of 2% of 1934.7million = 19,347,000 2. (6 points) Mustang Inc. issued $800,000 of 5%, 20-year bonds at 96 on January 1, 2000. Through Jan 1, 2008, Mustang amortized $20,000 of the bond discount. On January 1, 2008, Mustang Inc. retired the bonds at 102 (after making the interest payment on that date). a. Calculate the net book value of the bond on January 1, 2008 Interest = .05 x800,000= 40,000 Net book value = 800,000x102/100 = 816,000 b. and the gain or loss that Mustang would report for this retirement. Loss of the retirement = 800,000-816,000= 16,000 3. ...
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Multiple choices 1. d. Gap because its accounts payable turnover is lower and its accounts payable days outstanding is higher. 2. c. For debt issued at a discount: interest expense reported on the income statement equals cash interest payment less amortization of the discount…
Author : krystina92

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