Strict warning: no wrong answer Accounting Questions 10 MarksQuestion: 1Outback Camera Co. was organized to sell a single product that carries a 60-day warranty against defects. Engineeringestimates indicate that 5% of the units sold will prove defective and require an average repair cost of $40 per unit. DuringOutback's first month of operations, total sales were 400 units; by the end of the month, 6 defective units had been repaired.The liability for product warranties at month-end should be $a. $370b. $930c. $680d. $445Question: 2Adam Inc. had assets of $255,000 and liabilities of $127,000 at the beginning of the year. During the year, revenues were$143,000 and expenses were $91,000. Also, during the year the business paid the owners a dividend of $5,000 and assetsincreased by $21,000.What were Adam's total liabilities at the end of the year?a. $101,000b. $145,000c. $195,000d. $246,000

Question 1:Outback Camera Co. must calculate the liability for product warranties based on the…

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EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 9PROB

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3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against product defects. Experience indicates that four percent of the units sold will prove defective, requiring an average repair cost of $50 per unit. During the first month of business, product sales were $320,000, and 20 of the units sold were found to be defective and repaired during the month. What is the accrued liability for product warranties at month-end? a $1,000 b. $600 c. $1,600 d. $2,000
outback Co. was organized to sell a single product that carries a 45 day warranty against defects. Engineering estimates indicates that 12% of the units sold will prove defective and require an average repair cost of $20 per unti. During outbacks first month of operations, total sales were 200 untis; by the end of the month, nine defective units had been repaired. The Liability for product warrantees at month end should be. a.$180 b.$660 c.$300 d.$480
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12 Warranty Costs Milford Company sells a motor that carries a 60-day unconditional warranty against product failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end of the product warranty period, two percent of the units sold will require repair at an average cost of $125 per unit. The following data reflect Milford's recent experience: Units sold Known product failures from sales in: October November December October November December Dec. 31 Total 34,500 33,000 37,500 105,000 180 270 195 240 330 315 690 525 315 Calculate the estimated liability for product warranties at December 31. $ (Assume that warranty costs of known failures have already been reflected in the records.)
Video-Technical, Inc. was organized to sell a single product for $600 per unit, including a 60-day warranty against defects. Engineering estimates indicate that 5% of the units sold will prove defective and require an average repair cost of $50 per unit. During September, total sales were $198,000; 9 units sold during September were found defective and repaired. The accrued liability for product warranties at month-end should be: Select one: a. $ 850 b. $ 400 c. $ 450 d. $1,150 e. None of the above
Instructions Chart of Accounts General Journal Instructions X Ecco Company sold $145,000 of Kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 9% of the sales price. On October 15, a customer required a $100 part replacement, plus $86 labor under the warranty. Required: Provide the journal entry for (a) the estimated expense on September 30 and (b) the October 15 warranty work Refer to the Chart of Accounts for exact wording of account titles
Modem Appliances, Inc. sells food processors for $150 with a 120-day warranty against defects. Past experience indicates that 5% of the processors will have some defect during the warranty period and that the necessary repairs and adjustments will cost $25 per defective unit. Sales for August are $225,000. What is the estimated liability for product warranties for units sold in August? Select one: a. $3,000 b. $1,800 C. $11,250 d. $1,875 e. None of the above
Sea Port Company sells a product that carries a 60-day unconditional warranty against product failure. Based on statistical analysis, Sea Port knows that between the time of sale and the lapse of the warranty, 4% of the units sold will fail and require repair at an avenge cost of $40 per unit. The following data reflect the first three months during which the product was sold. October November December Units sold 30,000 36,000 60,000 Known units of product failure From sales of October 480 600 120 November 300 960 December 900 Prepare the general journal entry to record Sea Port’s estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records.
Chapter 4/Question 3: Mobiles Co sells goods with a one year warranty under which customers are covered for any defect that becomes apparent within a year of purchase. In calendar year 20X4, Mobiles Co sold 100,000 units. The company expects warranty claims for 5% of units sold. Half of these claims will be for a major defect, with an average claim value of $50. The other half of these claims will be for a minor defect, with an average claim value of $10. What amount should Mobiles Co include as a provision in the statement of financial position for the year ended 31 December 20X4?
Brigham Company sells an electric timer that carries a 60-day unconditional warranty against product failure. Based on a reliable statistical analysis, Brigham knows that between the sale and the end of the product warranty period, three percent of the units sold will require repair at an average cost of $35 per unit. The following data reflect Brigham's recent experience: Units sold Known product failures from sales in: October November December October November December Dec. 31 Total 36,000 34,000 45,000 115,000 320 550 230 210 360 410 1,080 590 410 Calculate the estimated liability for product warranties at December 31. $ 168,510 x (Assume that warranty costs of known failures have already been reflected in the records.)
Warranty Costs Brigham Company sells an electric timer that carries a 60-day unconditional warranty against product failure. Based on a reliable statistical analysis, Brigham knows that between the sale and the end of the product warranty period, three percent of the units sold will require repair at an average cost of $105 per unit. The following data reflect Brigham's recent experience: Units sold Known product failures from sales in: October November December October November December Dec. 31 Total 54,000 51,000 67,500 172,500 480 825 345 315 540 615 1,620 885 615 Calculate the estimated liability for product warranties at December 31. $ (Assume that warranty costs of known failures have already been reflected in the records.)
PROBLEM 17: You are engaged to audit the December 31, 2012, financial statements of LIZA COMPANY, a manufacturer of household appliances. Your audit disclosed the following situations. a. In June 2012, the company began producing and selling a new line of dishwasher. By the end of the year, it had sold 120,000 to various dealers for P15,000 each. The product was sold under a l-year warranty, and the company estimates warranty costs to be P750 per dishwasher. Liza had paid out P30 million in warranty expenses as of December 31, 2012, which also the amount shown as warranty expense in its income statement for the current year. b. In response to your letter of audit inquiry, Liza's lawyer informed you that the company is involved in a lawsuit for violation environmental laws regulating hazardous waste. Although the litigation is pending, Liza's lawyer is certain that Liza will most probably have to pay cleanup costs and fines of P5,500,000. Liza neither accrued nor disclosed this loss in…

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