An entity recognized the following transactions during 2019: The entity estimated its annual warranty expense at 2% annual net sales: 4,000,000 Net sales Warranty liability: December 31, 2018 Warranty payment during 2019 60,000 credit 50,000 The entity was sued by a competitor for P1,500,000 for infringement of a trademark. Based on the advice of the company's legal counsel, the entity accrued the sum of P1,000,000 as a provision in its financial statements for the year ended December 31, 2019. On February 15, 2020, the court decided in favor of the plaintiff and ordered the entity to pay a sum of P1,400,000. The financial statements were prepared by the entity's management on January 31, 2020 and authorized for issue on March 1, 2020. 8. What total amount of expenses should be recognized for the year ended December 31, 2019? a. 1,480,000 b. 1,080,000 c. 1,450,000 d. 1,050,000 9. What total amount of liabilities should be recognized on December 31, 2019? a. 1,090,000 b. 1,490,000 c. 1,450,000 d. 1,050,000

An entity recognized the following transactions during 2019: The entity estimated its annual warranty expense at 2% annual net sales: 4,000,000 Net sales Warranty liability: December 31, 2018 Warranty payment during 2019 60,000 credit 50,000 The entity was sued by a competitor for P1,500,000 for infringement of a trademark. Based on the advice of the company's legal counsel, the entity accrued the sum of P1,000,000 as a provision in its financial statements for the year ended December 31, 2019. On February 15, 2020, the court decided in favor of the plaintiff and ordered the entity to pay a sum of P1,400,000. The financial statements were prepared by the entity's management on January 31, 2020 and authorized for issue on March 1, 2020. 8. What total amount of expenses should be recognized for the year ended December 31, 2019? a. 1,480,000 b. 1,080,000 c. 1,450,000 d. 1,050,000 9. What total amount of liabilities should be recognized on December 31, 2019? a. 1,090,000 b. 1,490,000 c. 1,450,000 d. 1,050,000

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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