4. A Corp. began operations in January 2021. A sells one product for $400 each that carries a two-year warranty against defects. A's management projects that 5% of the product will require repair during the first year of the warranty while approximately 1% will require repair during the second year of the warranty. Warranty costs per unit are $90. Sales and warranty information for 2021 and 2022 are as follows: 2021: Sold $800,000 on account; Required Sales tax charged at 8% on all sales. Paid warranty expenditures of $7000. 2022: Sold $900,000 on account; Required Sales tax charged at 8% on all sales. Paid warranty expenditures of $12,000.
4. A Corp. began operations in January 2021. A sells one product for $400 each that carries a two-year warranty against defects. A's management projects that 5% of the product will require repair during the first year of the warranty while approximately 1% will require repair during the second year of the warranty. Warranty costs per unit are $90. Sales and warranty information for 2021 and 2022 are as follows: 2021: Sold $800,000 on account; Required Sales tax charged at 8% on all sales. Paid warranty expenditures of $7000. 2022: Sold $900,000 on account; Required Sales tax charged at 8% on all sales. Paid warranty expenditures of $12,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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