Accrued Product WarrantyLachgar Industries disclosed estimated product warranty payable for comparative years as follows:(in millions)Current estimated product warranty payableNoncurrent estimated product warranty payableYear 2$16,2119,860$26,071Year 1$15,5428,690$24,232TotalPresume that Lachgar's sales were $211,240 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $16,712million.a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cashon the business relative to the quick current assets and other longer-termb. Provide the journal entry for the Year 2 product warranty expense.c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

There are two types of warranty a customer can take from market.Service Type Warranty - It can be…

Accrued Product Warranty Lachgar Industries disclosed estimated product warranty payable for comparative years as follows: (in millions) Current estimated product warranty payable Noncurrent estimated product warranty payable Year 2 Year 1 $16,211 $15,542 9,860 8,690 $26,071 $24,232 2. Assume that the total paid on warranty claims during Year 2 was $16,712 Total Presume that Lachgar's sales were $211,240 million in million. a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash on the business relative to the quick current assets and other longer-term b. Provide the journal entry for the Year 2 product warranty expense. c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

Accrued Product Warranty Lachgar Industries disclosed estimated product warranty payable for comparative years as follows: (in millions) Current estimated product warranty payable Noncurrent estimated product warranty payable Year 2 Year 1 $16,211 $15,542 9,860 8,690 $26,071 $24,232 2. Assume that the total paid on warranty claims during Year 2 was $16,712 Total Presume that Lachgar's sales were $211,240 million in million. a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash on the business relative to the quick current assets and other longer-term b. Provide the journal entry for the Year 2 product warranty expense. c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

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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Accrued Product Warranty Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year Prior Year Current estimated product warranty payable $11,050 $10,595 Noncurrent estimated product warranty payable 6,721 5,924 Total $17,771 $16,519 Assume that Harbour's sales were $130,324 million in current Year and that the total paid on warranty claims during the current year was $11,392 million. a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash the business relative to the quick current assets and other longer-term . b. Provide the journal entry for the current Year product warranty expense. Enter your answers in millions. If an amount box does not require an entry, leave it blank. fill in the blank d3bc3bf67fec01d_2 fill in the blank d3bc3bf67fec01d_3 fill in the blank…