4. LIZARD, Inc. provided warranty for all products sold during 2021. The entity sold200,000 units during the current year. It is estimated that 75% of the products will haveno defects. 15% of the products sold will have a minor defect and 10% of the productswill have a major defect. The cost of a minor defect is P100 per unit while the cost ofmajor defect is P300. The entity is also involved in a tax dispute with BIR in 2021. Basedon legal advice, there is a 40% chance that the entity will lose the case and the entityhave to pay P 500,000.What total amount of provisions should be recorded on December 31, 2021?

Solution: There are 40% chance to lose tax dispute case, therefore liability is not certain and…

Answered: 4. LIZARD, Inc. provided warranty for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company has accounts receivable of $300 000 and an associated doubtful debts allowance of $60 000. The revenue associated with the accounts receivable of $300 000 has already been included in taxable profit. The doubtful debts will be deductible when the amount is actually written off as bad with a related deduction to accounts receivable. REQUIRED a) Assuming that the tax rate is 30 percent, what is the amount of the temporary difference? b) Does this give rise to a deferred tax asset or a deferred tax liability, and what is the amount of the deferred tax asset/liability Please donot provide solution in image format provide solution in step by step format and asap
9. Risa Company
Early in 2020, Oriole Equipment Company sold 400 Rollomatics at $6,600 each. During 2020, Oriole spent $20,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. (a) Prepare 2020 entries for Oriole. Assume that Oriole estimates the total cost of servicing the warranties in the second year will be $40,000. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020
Kiner Equipment Company sells computers for P2,000 each and also gives cach customer a 2-year warranty. During 2004, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs as P40 for parts and P80 for labor. (Assume all sales occur at December 31, 2004 and warranty obligations are expected to be settled evenly throughout the warranty period.) In 2005, Kiner incurred actual warranty costs relative to 2004 computer sales of P10,000 for parts and 24,000 for labor. Requirements: a. Under the expense warranty treatment, give the entries to reflect the above transactions (accrual method) for 2004 and 2005. b. Under the cash basis method, what are the Warranty Expense balances for 2004 and 2005?
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Milima Electronic Company sells on account printers for RM1,500 each with a 2-year warranty for performing periodic services and replacing defective parts. Because of COVID 19 pandemic, the company sold only 700 printers on December 2019, however, based on past experience, the company has estimated the total 2-year warranty costs as RM30 for parts and RM60 for labor. On 2020, Miley incurred actual warranty costs relative to 2019 printer sales of RM10,000 for parts and RM18,000 for labor. REQUIRED: (a) Record the above transactions by using the expense warranty treatment for the years 2019 and 2020. (b) If the company sold printers in cash, what are the amounts of warranty expense for 2019 and 2020? (c) Determine amounts of warranty liability that should be recorded under current liabilities and long-term liabilities for the year 2019?
Das Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 2% of sales. Sales were $21 million and actual warranty expenditures were $31,750 for the first year of selling the product. Complete the following T-account to determine the amount (if any) Das should report as a liability at the end of the year. Note: Enter your answers in whole dollars. Beginning Balance Ending Balance Debit Warranty Liability Credit
During 2020, the Thomas Company began selling a new type of machine that carries a two-year assurance-type warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $1,000 per machine sold. During 2020, sales and actual warranty expenditures were $5,000,000 (100 machines) and $44,000, respectively. Thomas uses the GAAP approach of accruing warranty expense (and the related liability) in the year of the sale.
Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 2% of sales. Sales of the awnings in 2020 were $3,600,000. Accordingly, warranty expense and a warranty liability of $72,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 1% of sales rather than 2%. Sales of the awnings in 2021 were $4,100,000, and warranty expenditures in 2021 totaled $93,275. On December 30, 2017, Rival Industries acquired its office building…
Das Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 3% of sales. Sales were $9 million and actual warranty expenditures were $38,750 for the first year of selling the product. Complete the following T-account to determine the amount (if any) Das should report as a liability at the end of the year. Note: Enter your answers in whole dollars. Debit Beginning Balance Actual expenditures Ending Balance Answer is not complete. Warranty Liability 0 -11,750 38,750 → 27,000 0 -27,000 Credit Warranty expense
J-Matt, Inc., had pretax accounting income of $331,000 and taxable income of $376,000 in 2021. The only difference between accounting and taxable income is estimated product warranty costs of $45,000 for sales in 2021. Warranty payments are expected to be in equal amounts over the next three years (2022–2024) and will be tax deductible at that time. Recent tax legislation will change the tax rate from the current 25% to 20% in 2023. Determine the amounts necessary to record J-Matt’s income taxes for 2021 and prepare the appropriate journal entry.
Early in 2020, Pina Equipment Company sold 400 Rollomatics at $ 6,000 each. During 2020, Pina spent $ 20,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All sales transactions are on a cash basis. Prepare 2020 entries for Pina. Assume that Pina estimates the total cost of servicing the warranties in the second year will be $ 37,000. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Prepare 2020 entries for Pina assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, $ 58,000 relates to sales of warranty contracts.Warranty costs incurred in 2020 were $ 20,000. Estimate revenues to be recognized on a straight-line basis. (If no entry is required, select "No Entry" for the account titles…

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