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7. An electronics store is running a promotion where for every video game purchased, the customer rece acoupon upon checkout topurchase a second game at a 50% discount. The coupons expire in one yea The store normally recognized agross profit margin of40% of the seligprce on ideoprs how would the store account for a purchase using the discount coupon? a. The difference between the cost of the video game and the selling price prior to the coupon is recognized as premium expense. b. The difference between the cost of the video game and the cash received is recognized as premium expense. c. Premium expense is not recognized. d. The reduction in sales price attributed to the coupon is recognized as premium expense. 8. Collier borrowed $350,000 on October 1 and is required to pay $360,000 on March 1. What amount is the note payable recorded at on October 1 and how much interest is recognized from October 1 to December 31? a. $350,000 and $10,000 b. $350,000 and $0 c $350,000 and $6,000 d. $360,000 and $O 9. During 2012, Eaton Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 3% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2012 and 2013 are as follows Actual Warranty Sales Year 2012 2013 Total S 12,000 35,000 S 47,000 S 800,000 At December 31, 2013, Eaton should report an estimated warranty liability of a. $43,000. b. $15,000 .$35,000. d. $O Bond issues that mature in installments are called serial bonds. a. False b. True

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