here is the solution that i got .. can u now correct me if i was wrong :)



Q(1) Dubai’s Bagels incurred the following obligations during 2005.
10%, one-year, $ 9,000 note payable, issued November 1, 2005.
9%, three-year, $ 16,000 note payable, issued October 1, 2005.

a. What is the total Interest expenses on December 31, 2005.

10% X 9000 X 2/12 = 150
9% X 16000 X 3/12 = 360

then 150 + 360 = 510


b. What is the total interest expense for 2006:

10% X 9000 X 10/12 = 750
9% X 16000 X 12/12 = 1440

then 750 + 1440 = 2190


c. What is the total current liabilities on the December 31, 2007 balance sheet :

$16,000




Q(3) Rama, Inc. offers a two-year warranty against failure of its products. The estimated liability is 4% of sales in the year of sale and 6% in the second year. Sales for 2005 and 2006 were: $2,000,000 and $2,500,000, respectively. What is the warranty liability for 2005:


2000000 X 4% = 80,000





Q(4) Ajman, Inc. provides a two-year warranty on its products. Estimates are that 5% of sales will be returned for repair in the year of sale and 8% the following year. Sales and actual warranty costs for Goosen’s first two years of operations were:

SALES ACTUAL WARRANTY COSTS
2005 $ 800,000 $ 40,000
2006 $ 1,500,000 $ 120,000


Required:
a. Determine the warranty expense and warranty liability for 2005:

Warranty expense= 5% X 800,000 = 40,000

Warranty liabilty= 40000 - 40000 = 0


b. Determine the warranty expense for 2006.

8% X 800000 = 64,000
5% X 1500000 = 75,000

then 64000 + 75000 = 139,000

please check is for me .. thank you in advance