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RSM219 > Chapter 9 > Flashcards

Chapter 9 Flashcards

1
Q

Common current liabilities due to lenders

A

Bank indebtness
Short term loans
Current portion of long term debt

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2
Q

Revolving credit facilities

A

Bank uses subsequent cash deposits to repay the loan

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3
Q

Short term loans are secured by

A

AR or inventory or both

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4
Q

Blended instalment payments

A

Long term loan payments that include both principal and interest components

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5
Q

Current portion of long term debt

A

Portion of principal due within next year

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6
Q

Reclassification entry

A

Presents current portion of long term debt amounts as current liabilities rather than long term

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7
Q

Reclassification journal entry

A

Dr long term loan payable

Cr current portion of long term debt

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8
Q

Current liabilities due to suppliers

A

Trade payables

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9
Q

Current liabilities due to customers

A 
Unearned revenue 
Gift card liability 
Customer loyalty provision 
Sales return provision 
Provision for warranty claims
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10
Q

Journal entry for unearned revenue at time of customer purchase

A

Dr cash

Cr unearned revenue

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11
Q

Journal entry for unearned revenue when service is provided

A

Dr unearned revenue

Cr revenue

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12
Q

Two transactions relating to gift cards

A

Initial sale

Redemption

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13
Q

Initial sale journal entry

A

Dr cash

Cr unearned revenue (or gift card liability)

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14
Q

Redemption journal entry

A

Dr unearned revenue
Cr sales revenue
Dr COGS
Cr inventory

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15
Q

Breakage

A

Gift cards never used, between 10 and 15% in Canada

Estimated portion of breakage is recognized as revenue and gift card liability reduced

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16
Q

Two entries for loyalty programs

A

Initial sale

Additional goods to be provided in the future

17
Q

Journal entry for expected sales returns

A

Dr sales returns and allowances (contra revenue account)

Cr sales returns and provisions

18
Q

Warranty provision

A

Estimate amount each period and make a liability for it

Accrue a warranty expense and record liability named warranty provision

19
Q

Journal entry to record warranty provision in period of sale

A

Dr warranty expense

Cr warranty provision

20
Q

Journal entry when a warranty claim is made

A 
Dr warranty provision
Cr one of the following 
Inventory
Inventory and wage expense 
Cash
Unearned revenue 
Miscellaneous revenue
21
Q

Current liabilities due to employees

A

Wages payable
Pensions
Employment insurance
Income tax

22
Q

Fringe benefits

A

Benefits that must be recognized cash expense in the periods for which they are incurred and a corresponding liability established

23
Q

Pension cost for employees

A

4.95%

24
Q

Pension costs for employers

A

Match employee

25
Q

Employment insurance cost for employees

A

1.88% of wages

26
Q

Employee insurance cost for employers

A

1.4 times what employee pays

27
Q

4 payroll entries

A

Employee entry
Employer entry
Payment of wages
Remittance of source deductions

28
Q

Employee journal entry

A 
Dr wage expense
Cr employee income taxes payable
Cr CPP Payable
Cr EI payable 
Cr wages payable (and cash if paying now)
29
Q

Employer journal entry

A

Dr wage expense
Cr cpp payable (equal employee)
Cr EI payable (1.4 times employee)

30
Q

Payment of wages journal entry

A

Dr wages payable

Cr cash

31
Q

Remittance journal entry

A

Dr employee income taxes payable
Dr cpp payable (both employee and employer)
Dr ei payable (both portions)
Cr cash

32
Q

Current liabilities due to government

A

Corporate tax return (no later than 6 months after end of fiscal year)

33
Q

Current liabilities due to shareholders

A

Dividends payable

34
Q

Dividend declared journal entry

A

Dr dividends declared

Cr dividends payable

RSM219 (9 decks)

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