4. Analyze the estimated warranty liability account toascertain whether actual warranty costs approximate theestimate. The sales and warranty repairs are made evenlyduring the year.5. Prepare journal entry to correct the estimated warrantyliability on December 31, 2021. Problem 3-1 (IAA)arepair warranty The sale price for each set is P15,000. Theaverage repair cost per set is P800.Research has shown that 20% of all sets sold are repaired inthe first year and 40% in the second year.20202021300500150,000Number of sets sold40,000Total payments'for warranty repairs

Warranty refers to the guarantee in which the manufacturer of the goods promises to replace the good…

4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.

4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 1)Suppose the company in the previous question offers a two-year extended warranty, which it sells,…

A: Given:Company offers two year extension warrantyExtended warranty sales total=$20000During 2020 the…

Q: 1. Costco Wholesale Corporation borrows $640,000 on September 1, 2021. Costco signs a nine- month,…

A: Formula: Interest amount = Notes payable amount x Time period x Interest rate.

Q: On January 1, 2020, Aggie Company purchased a building for $65,000, making a cash down payment of…

A: Interest Expenses:- It is an amount which one pays over the principal amount of loan or mortgage…

Q: The June 30, 2019, balance sheet of Ram Technologies reports the following: Accounts…

A: Requirement No. 1 (i) Record the transactions in the journal: Date Particulars Debit Credit…

Q: What is the due date of a 220 day loan made on February 12?

A: Due Date: It represents the day when the accruals on the loan fall due. Another name for the due…

Q: The following information is available for Border Limited, which adjusts and closes its accounts at…

A: Journal Entry :— It is an act of recording transaction in books of account when transaction…

Q: I need help with step 2 of this problem.

A: When bonds issued at discount, such discount on bonds payable has to amortized over the life period…

Q: date Face Rate% Term aug. 8. 45000.…

A: Income statement is an important lifeline of accounting as it defines a companies financial position…

Q: Product Warranties The company also sells wax and leashes to customers. They are trying to decide…

A: As per the conservative approach, the estimated expense for warranties should be provided for in the…

Q: On April 1, 2020, Mountain Company sold merchandise and received a $19,200, three-year,…

A: A noninterest bearing note of $19,200 has been received by the company for the merchandise which has…

Q: sparkling water inc. had a total sales of 3,000,000 for 2019. this amount includes 150,000 relating…

A: Net sales = total sales - sales of extended service-type warranty = 3000000 - 150000 = 2,850,000

Q: Headland Company must make computations and adjusting entries for the following independent…

A: Liability might indicate that an individual owe someone money or services, but it also frequently…

Q: When auditing product warranty liabilities, when should the warranty cost be recognized? Question 1…

A: Answer:- Warranty liability:- A warranty liability is an account that a business uses to record the…

Q: On October 12, 2020, Golf Co. received from one of its customers, Ping Co., a $30,500, 8% 90 day…

A: Introduction: Journal: Recording of a business transactions in a chronological order. First step in…

Q: Sheridan Company sells automatic can openers under a 75-day warranty for defective merchandise.…

A: The warranty Expenses are estimated on the basis of past experience for defective units. Journal…

Q: On January 1, 2021, Umbrella Insurance Company has collected $24,000 for multiple two-year insurance…

A: Insurance premium for a month = Total premium collected / Period of insurance = $24,000 / 24 months…

Q: On December 16, Charlotte's Cookies signed a $27,000, 75-day, 9% note payable to cover a past due…

A: Notes payable are a promissory notes and a negotiable instruments. In this one party agrees to pay a…

Q: How much is the interest expense to be reported by the company for the year ended December 31, 2022?…

A: Interest expense on note payable is the amount of interest accrued on note payable calculated at the…

Q: Lily Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on…

A: Journal entries refer to the recording of accounts in the debit and credit format which can be used…

Q: A company has the following December 31 year-end unadjusted balances: Allowance for Sales Discounts,…

A: The journal entries are prepared to record the transactions on regular basis. The adjustment entries…

Q: Pocotalk Electronics issued a $1,000,000, 5%, 10-ycar mortgage note on December 31, 2018. The…

A: 1. Date Cash Paid Interest Expense Principal Installment Balance of payable 31 Dec 18…

Q: 1. Determine the estimated warranty liability on December 31, 2022. 2. Analyze the estimated…

A: Answer: We are given First year warranty = 4% Second year warranty = 10%

Q: 44.ABC Company received a one year interest bearing note on May 1. The note plus interest are due on…

A: The accrued interest is the interest earned but not received yet. It is recorded as the current…

Q: B8 Inc's sales during 2021 totaled $375,000, and the company estimates that warranty costs will be…

A: Journal etries Warranty Expense A/c Dr. $ 16500 ($375000 x 4.4%) Warranty Payable A/c Cr.…

Q: Erindale Automotive borrowed $8,800 from the Bank of Montreal on a demand note on May 10. Interest…

A: Here asked for multi sub part question we will solve for first three sub part question for you. If…

Q: Journalize the entry to record the payment of the second installment the following June 30

A: Interest is charges on the maximum balance payable. Interest = Principle Outstanding x rate of…

Q: During 2019, Namnama Company introduced a new product carrying a two-year warranty against defects…

A: Lets understand the basics. In Accrual basis, warranty cost is needed to be recorded in the period…

Q: Compute for the total interest income to be recognized in 2020 in relation to the four note…

A: Promissory Note:- It is a written document where the writer has to pay the agreed amount to the…

Q: A RO40,000, interest-bearing note payable is signed on December 26, 2020. If the note is a 120-day…

A: Notes Payable- It is type of financial instrument which helps the entity is collecting fund at a…

Q: Following are transactions for Veilstone Jewelers. November 1 Accepted a $15,000, 180-day, 5% note…

A: The journal entries are prepared to record the transactions on regular basis. The adjustment entries…

Q: During 2019, Namnama Company introduced a new product carrying a two-year warranty against defects…

A: The price that a business expects to pay for the replacement or repair of goods that customers buy…

Q: What is the correct balance of the estimated liability for production warranty at the end of 2020?

A: Warranty can be defined as contract between two parties- the buyer and the seller which arises out…

Q: Larkspur, Inc. receives $260,400 when it issues a $260,400, 10% mortgage note payable to finance the…

A: Journal: Recording of a business transactions in a chronological order.

Q: 1. On January 1, 2019, EROS Company introduced a new line of products that carries a 3-year warranty…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Required: 1. Prepare journal entries in connection with the warranty using the “expense as incurred”…

A: Warranty is a form of assurance that is being provided by seller to the buyer that in case product…

Q: Metlock Corp. carries an account in its general ledger called Investments, which contained debits…

A: Journal entry:Journal entry refers to recording the day-to-day transactions of the business in the…

Q: Prepare a single compound journal entry, assuming that, in addition to the assurance warranty,…

A: Warranty expense is the expense which can be incurred by the company for any future repair or…

Q: The company has a mortgage note payable for $1,500,000 that comes due in year 3. this note is paid…

A: Lets understand the basics. Journal entry is required to make to record event and transaction that…

Q: On December 31, 2019, Oriole Inc. borrowed $3,060,000 at 13% payable annually to finance the…

A: Capitalization of interest The amount of interest cost that theoretically could have been avoided if…

Q: Prepare the journal entry to record the payment of interest and the discount amortization on…

A: Step 1:Journal Entry to record the issuance of Bonds:Cash(Issued Price) = $730,000Discount on Bonds…

Q: How do I prepare the rates receivables give that Rates Receivables: Owing at 1 January 2019 $100;…

A: Receivables:- These are accounts that have to owes to a business. These are current assets for the…

Q: Part 1: Prepare a General Journal entry for the following transaction: On December 17, On Your Mark…

A: The journal entries are prepared to keep the record of day to day transactions of the business on…

Q: Fisher minus Wallace Corporation signed a six-month note payable on October 23, 2021. What accounts…

A: Note payable means the instrument which is issued by company acknowledging the debt due by company…

Q: i Required Information [The following Information applies to the questions displayed below.]…

A: Journal Entry :— It is an act of recording transactions in books of account when transaction…

Question

4. Analyze the estimated warranty liability account to
ascertain whether actual warranty costs approximate the
estimate. The sales and warranty repairs are made evenly
during the year.
5. Prepare journal entry to correct the estimated warranty
liability on December 31, 2021.

Problem 3-1 (IAA)
a
repair warranty The sale price for each set is P15,000. The
average repair cost per set is P800.
Research has shown that 20% of all sets sold are repaired in
the first year and 40% in the second year.
2020
2021
300
500
150,000
Number of sets sold
40,000
Total payments'for warranty repairs

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction:

VIEW

Step 2 Explanation:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

F
Swifty Company must make computations and adjusting entries for the following independent situations at December 31, 2026. 1. Its line of amplifiers carries a 3-year warranty against defects. On the basis of past experience, the estimated warranty costs related to dollar sales are first year after sale-2% of sales revenue; second year after sale-3% of sales revenue; and third year after sale-5% of sales revenue. Sales and actual warranty expenditures for the first 3 years of business were: Sales Revenue 2024 $764,500 2025 1,177,800 2026 1,155,500 Warranty Expenditures $6,330 16,190 64,340 Compute the amount that Swifty should report as a liability in its December 31, 2026, balance sheet. Assume that all sales are made evenly throughout each year with warranty expenses also evenly spaced relative to the rates above. Liability that should be reported on December 31, 2026 $ 2. With some of its products, Swifty includes coupons that are redeemable in merchandise. The coupons have no…
For attached data table: Request: Make initial entry, from the point of view of the borrower (who receives a loan), separating short- and long-term portion of the loan. Make appropriate entries to be made on 31 August 2023, not forgetting reclassification from long term to short term.
Required: Assume credit sales for 2019 were $312,000 and that on December 31, 10% of credit sales are estimated to be uncollectible. Using the percentage of sales method:Determine the amount to be charged to the uncollectible expense account.Prepare the Allowance for uncollectible account. Prepare the balance sheet extract to show the net realizable value of the Accounts Receivable as at December 31 Journal Entries Date Particulars Debit($) Credit($) 10.1.20 Accounts Receivable 11000 To sales 11000 15.5.20 Allowance for uncollectible accounts(2500+400) 2900 To accounts receivable 2900 4.8.20 Cash(70% of 11000) 7700 Allowance for uncollectible accounts(30% of $11000) 3300 To Accounts Receivable 1100 26.10.20 Accounts Receivable(30% of $400) 120 To allowance for uncollectible accounts 120 26.10.20 Cash 120 To accounts receivable 120…
Ivanhoe Factory provides a 2-year warranty with one of its products which was first sold in 2020. Ivanhoe sold $909,800 of products subject to the warranty. Ivanhoe expects $124,480 of warranty costs over the next 2 years. In that year, Ivanhoe spent $73,090 servicing warranty claims. Prepare Ivanhoe's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date 2020 During 2020 12/31/20 Account Titles and Explanation (To record sales) (To record warranty claims) Debit Credit
18. Melanie Corp. borrowed $101,000 cash on September 1, 2019, and signed a one-year 6%, interest-bearing note payable. The interest and principal are both due on August 31, 2020. Assume that the appropriate adjusting entry was made on December 31, 2019 and that no adjusting entries have been made during 2020. Which of the following would be the required journal entry to pay the note on August 31, 2020? Multiple Choice Interest payable2,020 Notes payable101,000 Cash 103,020 Notes payable101,000 Interest expense6,060 Cash 107,060 Interest expense6,060 Cash 6,060 Interest expense4,040 Interest payable2,020 Notes payable101,000 Cash 107,060
Prepare the journal entries, with appropriate journal entry descriptions, for 2020, including any required year-end adjusting entries.The company prepares annual adjusting entries.
Following are transactions of Danica Company. Dec. 13 Accepted a $18,000, 45-day, 10% note in granting Miranda Lee a time extension on her past-due account receivable. 31 Prepared an adjusting entry to record the accrued interest on the Lee note.
Please tell me what the how this would be recorded in a journal entry: accounts/and amount. Record the interest of $400 on a note receivable that was earned at year-end, although collection of the interest is not due until the following year.
Required:1. Prepare the adjustment to correct the estimated warranty liability on December 31, 2022.