Question

Byrd owns a transmission repair shop He sells warranties allowing the customer to fix their transmissions on the shop if they return within 3 years or 60.000 miles. Byrd estimates that 7% of sales will be covered under warranty. The average repair costs

$ 325. Sales for the year were 785,000. The balance in the warranty liability account was 82,250 at the beginning of the year. Warranty expenditures were 97500.( 5 points)

What is warranty expense for the year?

What is the warranty liability as of 12/31?

Lewis Inc. issued   30 $10000 bonds on January 1, 2015. The bonds paid 8% when the market rate of interest was 6%. The bonds matured in 10 years. Interest is paid semi-annually on June 30 and December 31.

Using the information above do the following:

Calculate the present value of the bonds?

What is the carrying value of the bonds at 6/30/18?

If the bonds are redeemed on 6/30/18 for 198000. What is the gain or loss on the redemption

Answer 1

the answer to question 1

question 2

the present value = $ 349,330.83

carrying value of bond on 6/30/18 = $ 273,785.71

gain if redeemed on 6/30/18 for 198,000 = 273,785.71 - 198,000 = $ 75,785.71