Coronado Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Coronado estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $25. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month November December (a) Units Sold 31,600 33,600 Units Defective Prior to December 31 632 Account Titles and Explanation 420 Prepare the journal entry to record the costs incurred in honoring 1,052 warranty claims. (Assume actual costs of $26,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit

Coronado Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Coronado estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $25. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month November December (a) Units Sold 31,600 33,600 Units Defective Prior to December 31 632 Account Titles and Explanation 420 Prepare the journal entry to record the costs incurred in honoring 1,052 warranty claims. (Assume actual costs of $26,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit

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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A company sells goods with a warranty for the cost of repairs required in the first 1 month after purchase. Past experience of suggests: stion i) 85% of the goods sold will have no defects ii) 8% will have minor defects iii)7% will have major defects If minor defects were detected in all products sold, the cost of repairs will be OMR 66,000; if major defects were detected in all products sold, the cost would be OMR 272,000. What amount of provision should be made? OMR 50,700 OMR 24,320 OMR 26,380 个 None of them
Acme Ltd. manufactures point of sale terminals used by businesses to process transactions. At the close of business on 30 September, the company had 450 terminals in inventory. The company's policy is to maintain an ending inventory of terminals equal to 30 per cent of next month's sales. Each terminal manufactured requires 25 minutes of assembly and inspecting time at a cost of 70 cents per minute. The company expects the following sales activity: October 8 000 units November 12 000 units December 13 000 units January 10 000 units What is the total projected direct labour cost for November and December? O $302 000 O None of the other alternatives $210 000 O $427 000
During December, Maxum Company sold 3,900 units of a product that carries a 60-day warranty. December sales for this product total $127,000. The company expects 6% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $19. Record the related adjusting entry.
Boost inc sells vitamin supplements to customers with an unconditional sales return if they are not satisfied. The sales return extends 90 days. On May 12, 2023, High Country Integrated health purchases $4,000 of products with a cost of $2,000. Based on the company's prior experience, estimated returns are 20%. The journal entry to record the expected sales return and cost of goods sold includes a
Q3- On December 1, Aramex Company introduces a new product that includes a one-year warranty on parts. In December, 500 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $60 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost.
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
Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately 4% of sales. Sales for the month of December are $400,000. Actual warranty expenditures in January of the following year were $13,000. Required: 1. Does this situation represent a contingent liability? 2. & 3. Record the necessary entries in the Journal Entry Worksheet below. 4. What is the balance in the Warranty Liability account after the entries in Parts 2 and 3?
Ivanhoe Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns extends 60 days. On February 10, 2021, a customer purchases $3000 of products (cost $1500). Assuming that based on prior experience, estimated returns are 10%. The journal entry to record the expected sales return and cost of goods sold includes a O debit to Cash and a credit to Sales Revenue of $3000. O debit to Cost of Goods Sold and credit to Inventory for $1500. O debit to Sales Returns and Allowance of $300 and a credit to Allowance for Sales Returns and Allowances of $150. O credit to Estimated Inventory Returns of $150.
4. Bonita.com sells 6800 units of its product for $460 each. The selling price includes a one- year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $40 per unit. In the year of sale, warranty contracts are honored on 120 units for a total cost of $4800. What amount should Bonita.com accrue on December 31 for estimated warranty costs? Select answer from the options below a. $8160 b. $32640 c. $ 4800 d. $3360
5 Bally Manufacturing sent Intel Corporation an invoice for machinery with a $13,200 list price. Bally dated the invoice July 31 with 10 EOM terms. Intel receives a 40% trade discount. Intel pays the invoice on August 13. On August 09, Intel Corporation returns $900 of the machinery due to defects. What does Intel pay Bally on August 13? Payable amount to Bally