Solve the problem 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. Estimated defective units= 5% of units Sold= 400 Units x 5%= 20 UnitsThe Liablity for…

Answered: Accounting Questions 10 Marks Question:…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

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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.)
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.
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.)
Warranty CostsMilford Company sells a motor that carries a three-month 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, four percent of the units sold will require repair at an average cost of $60 per unit. The following data reflect Milford’s recent experience: October November December Dec. 31 Total Units sold 23,000 22,000 25,000 70,000 Known product failures from sales in: October 120 180 160 460 November 130 220 350 December 210 210 Calculate, and prepare a journal entry to record, the estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records. General Journal Date Description Debit Credit Dec.31 AnswerProduct Warranty ExpenseEstimated Liability for Product Warranty Answer Answer AnswerProduct Warranty ExpenseEstimated…
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Practice Question During year 1, Gum Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to sales are 2% within twelve months following the sale and 4% in the second twelve months following the sale. Sales and actual warranty expenditures for the years ended December 31, year 1 and year 2, are as follows: Actual warranty expenditures $2,250 7,500 $9,750 Year 1 Year 2 Sales $150,000 250,000 $400,000 AICPA.920535FAR What amount should Gum report as estimated warranty liability in its December 31, year 2 balance sheet?
Backpack Co. was organized to sell a single product that carries a 45-day warranty againstdefects. Engineering estimates indicate that 2% of the units sold will prove defective andrequire an average repair cost of $60 per unit. During Backpack’s first month of operations,total sales were 900 units; by the end of the month, five defective units had been repaired.The liability for product warranties at month-end should bea. $1,380.b. $300.c. $1,080.d. $780.
E10-7A Warranty Costs Milford Company sells a motor that carries a 3-month 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, three percent of the units sold will require repair at an average cost of $60 per unit. The following data reflect Milford’s recent experience: October November December Dec.31 Total Units sold 23,000 22,000 25,000 70,000 Known product failures from sales in: October 120 180 160 460 November 130…

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