A new product introduced by Beauty Promotions carries a two-year warranty against defects. The estimated warranty costs related to sales are as follows: Year of sale 3% Year after sale 5% Sales and actual warranty expenditures for the years ended Dec. 31, 2019 and 2020 are as follows: Sales Actual Warranty Expenditures P 800,000 P 20,000 2019 2020 1,000,000 70,000 What amount should Beauty report as its estimated liability as of Dec. 31, 2020?
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- Assurance-Type Warranty Clean-All Inc. sells washing machines with a 3-year assurance-type warranty. In the past, Clean-All has found that in the year after sale, warranty costs have been 3% of sales; in the second year after sale, 5% of sales; and in the third year after sale, 7% of sales. The following data are also available: Required: 1. Prepare the journal entries for the preceding transactions for 20192021. Closing entries are not required. 2. What amount would Clean-All report as a liability on its December 31, 2021, balance sheet, assuming the liability had a balance of 88,200 on December 31, 2018? 3. Next Level How would the failure to recognize a contingent liability affect the financial statements?During 2019, Angel Co. introduced a new line of appliances that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures2019 P 400,000 P 6,0002020 1,000,000 30,0002021 1,400,000 90,000 P2,800,000 P126,000 assume that sales and repairs occurs evenly through-out the year, how much is the estimated warranty liability at December 31, 2021?During 2019, Bonita Industries introduced a new line of machines that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 1% of sales in the year of sale, 2% in the year after sale, and 3% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2019 $ 1394000 $ 24000 2020 997000 38000 2021 1394000 90000 $ 3785000 $ 152000 What amount should Bonita report as a liability at December 31, 2021? $ 35820 $0 $ 75100 $ 13940
- In 2019, Shiftry Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual expenditures for 2019 and 2020 are presented below: 2019 2020 Sales 450,000 600,000 Actual warranty expenditures 15,000 30,000 What is the estimated warranty liability at the end of 2020?During 2019, Lawton Company introduced a new line of machines thatcarry a 3-year assurance-type warranty against manufacturer's defects.Based on industry experience, warranty costs are estimated at 2% ofsales in the year of sale, 4% in the year after sale, and 6% in the secondyear after sale. Sales and actual warranty expenditures for the first 3-year period wereas follows: Sales Actual WarrantyExpenditures 201920202021 $ 200,000500,000700,000 $ 3,00015,00045,000 $1,400,000 $63,000 What amount should Lawton report as a liability at December 31, 2021?a. $0b. $21,000C. $84,000d. $105,000In 2019, Caramel Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows: First year of warranty 5% Second year of warranty 9% Sales and actual warranty expenditures for 2019 and 2020 are presented below: 2019 2020 Sales P3,000,000 P4,000,000 Actual warranty expenditures 100,000 250,000 Using the accrual method, what amount should Caramel report as a liability…
- 1. On January 1,2019, QWERTY Company introduced a new line of product that carries a 3 year warranty against factory defects. The product warranties provide assurance that the new line of product will function as intended based on agreed-upon specifications. Estimated warranty costs related to peso sales are as follows: 2% of sales in the year of sale, 4% of sales in the year after sale, and 6% of sales in the second year after sale. Sales and warranty expenditures for the period 2019 to 2021 were as follows: Sales Actual warranty expenditures 2019 P 5,000,000 P 100,000 2020 7,500,00 150,000 2021 10,000,000 200,000 The company's reporting period is a calendar year. How much is the warranty liability as of December 31,2021? 2. If Chimmy Co. issued a 3-year non-interest bearing note in exchange of an equipment for P 1,000,000, which of the…15. A new product introduced by COCONUT Enterprise carries a two-year warranty against defects. The estimated warranty costs related to dollar sales are as follows: * Year of sale 3 percent Year after sale 5 percent Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021, are as follows: Actual Warranty Sales P 8,000,000 10,000,000 Expenditures P 200,000 700,000 2020 2021 What amount should COCONUT report as its estimated liability as of December 31, 2021? P 40,000 P 740,000 O P 240,000 O P 540,0001. On January 1, 2019, EROS Company introduced a new line of products that carries a 3-year warranty against factory defects. The product warranties provide assurance that the new line of products will function as intended based on agreed-upon specifications. Estimated warranty costs related to peso sales are as follows: 2% of sales in the year of the sale, 4% of sales in the year after-sale, and 6% of sales in the second year after sale. Sales and warranty expenditures for the period 2019 to 2021 were as follows: Sales Actual warranty expenditures 2019 P 5,000,000 P 100,000 2020 7,500,00 150,000 2021 10,000,000 200,000 The company's reporting period is a calendar year. How much is the warranty expense for the year 2020? 2. If Chimmy Co. issued a 3-year non-interest bearing note in exchange for an equipment for P 1,000,000, which of the…
- During 2018, Stable Company introduced a new line of product that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2018 P 400,000 P 6,000 2019 1,000,000 40,000 2020 1,400,000 90,000 P2,800,000 P136,000 What amount should Stable report as estimated warranty liability at December 31, 2020? What amount of warranty expense should be reported for 2019?In 2020, Pluto Company started selling new computer that carried a 2-year warranty against defects. Based on the manufacturer's recommendations, the entity estimated warranty cost as a percentage of sales.First year of warranty - 3%Second year of warranty - 9% 2020 2021 Sales 5,000,000 7,000,000 Actual warranty repairs 100,000 250,000 Prepare the necessary journal entries to record this transaction, using the expense as incurred approach, for the years 2020 and 2021.On January 1,2019, ABC Company introduced a new line of product that carries a 3 year warranty against factory defects. The product warranties provide assurance that the new line of product will function as intended based on agreed-upon specifications.Estimated warranty costs related to peso sales are as follows: 2% of sales in the year of sale, 4% of sales in the year after sale, and 6% of sales in the second year after sale.Sales and warranty expenditures for the period 2019 to 2021 were as follows: Sales Actual warranty expenditures2019 P 5,000,000 P 100,0002020 7,500,00 150,0002021 10,000,000 200,000The company's reporting period is a calendar year.How much is the warranty liability as of December 31,2021?