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Question: Robson Electronics completed these selected transactions during March 2021:

18 Feb 2023,2:34 PM


Robson Electronics completed these selected transactions during March 2021: 


a. Sales of $2,050,000 are subject to an accrued warranty cost of 9%. The accrued warranty payable at the beginning of the year was $32,000, and warranty payments for the year totaled $53,000.


b. On March 1, Robson Electronics signed a $55,000 note payable that requires annual payments of $11,000 plus 3% interest on the unpaid balance beginning March 1, 2022.


c. Barnard, Inc., a chain of discount stores, ordered $125,000 worth of wireless speakers and related products. With its order, Barnard, Inc., sent a check for $125,000 in advance, and Robson shipped $90,000 of the goods. Robson will ship the remainder of the goods on April 3, 2021.


d. Robson’s March payroll of $280,000 is subject to employee withheld income tax of $30,500 and FICA tax of 7.65%. On March 31, Robson pays employees their take-home pay and accrues all tax amounts.



Requirement 


Report these items on Robson Electronics’ balance sheet at March 31, 2021.

Expert answer


Based on the transactions provided, here is how the items would be reported on Robson Electronics' balance sheet at March 31, 2021:

Current assets:

Accounts receivable: $90,000 (from Barnard, Inc.)
Based on the transactions provided, here is how the items would be reported on Robson Electronics' balance sheet at March 31, 2021:

Current assets:

Accounts receivable: $90,000 (from Barnard, Inc.)
Accrued warranty receivable: $184,500 ($2,050,000 * 9% - $53,000 + $32,000)
Prepaid expenses: None mentioned in the transactions
Fixed assets: None mentioned in the transactions

Other assets:

Note payable: $55,000 (due March 1, 2022)
Interest payable on note payable: None mentioned in the transactions
Current liabilities:

Accrued warranty payable: $184,500 (see above)
Accounts payable: None mentioned in the transactions
Income tax payable: $30,500 (from March payroll)
FICA tax payable: $21,420 ($280,000 * 7.65%)
Long-term liabilities:

Note payable: $44,000 ($55,000 - $11,000 due in the current year)
Equity: None mentioned in the transactions

Note: This assumes that Robson Electronics' balance sheet as of the beginning of March 2021 is not provided. If it were, then some of the items above (such as the beginning balance of the accrued warranty payable) would need to be adjusted accordingly.


Based on the transactions provided, here is how the items would be reported on Robson Electronics' balance sheet at March 31, 2021:

Current assets:

Accounts receivable: $90,000 (from Barnard, Inc.)
Accrued warranty receivable: $184,500 ($2,050,000 * 9% - $53,000 + $32,000)
Prepaid expenses: None mentioned in the transactions
Fixed assets: None mentioned in the transactions

Other assets:

Note payable: $55,000 (due March 1, 2022)
Interest payable on note payable: None mentioned in the transactions
Current liabilities:

Accrued warranty payable: $184,500 (see above)
Accounts payable: None mentioned in the transactions
Income tax payable: $30,500 (from March payroll)
FICA tax payable: $21,420 ($280,000 * 7.65%)
Long-term liabilities:

Note payable: $44,000 ($55,000 - $11,000 due in the current year)
Equity: None mentioned in the transactions

Note: This assumes that Robson Electronics' balance sheet as of the beginning of March 2021 is not provided. If it were, then some of the items above (such as the beginning balance of the accrued warranty payable) would need to be adjusted accordingly.

Based on the transactions provided, here is how the items would be reported on Robson Electronics' balance sheet at March 31, 2021:

Current assets:

Accounts receivable: $90,000 (from Barnard, Inc.)
Accrued warranty receivable: $184,500 ($2,050,000 * 9% - $53,000 + $32,000)
Prepaid expenses: None mentioned in the transactions
Fixed assets: None mentioned in the transactions

Other assets:

Note payable: $55,000 (due March 1, 2022)
Interest payable on note payable: None mentioned in the transactions
Current liabilities:

Accrued warranty payable: $184,500 (see above)
Accounts payable: None mentioned in the transactions
Income tax payable: $30,500 (from March payroll)
FICA tax payable: $21,420 ($280,000 * 7.65%)
Long-term liabilities:

Note payable: $44,000 ($55,000 - $11,000 due in the current year)
Equity: None mentioned in the transactions

Note: This assumes that Robson Electronics' balance sheet as of the beginning of March 2021 is not provided. If it were, then some of the items above (such as the beginning balance of the accrued warranty payable) would need to be adjusted accordingly.
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