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During 2005, Cory Company introduced a new line of machines that carry a two-year warranty against manufacturer's defects. Based on industry experience, the estimated warranty costs related to peso sales are as follows: Year of sale 4% Year after sale 6% Sales and actual warranty expenditures for the years ended December 31, 2005 and 2006 were as follows: Actual warranty Sales expenditures P 500,000 700,000 P 15,000 47,000 2005 2006 P1,200,000 P 62,000 What amount should Cory report as its estimated warranty liability at December 31, 2006? PO c. P42,000 d. P58,000 a. b. P16,000

During 2005, Cory Company introduced a new line of machines that carry a two-year warranty against manufacturer's defects. Based on industry experience, the estimated warranty costs related to peso sales are as follows: Year of sale 4% Year after sale 6% Sales and actual warranty expenditures for the years ended December 31, 2005 and 2006 were as follows: Actual warranty Sales expenditures P 500,000 700,000 P 15,000 47,000 2005 2006 P1,200,000 P 62,000 What amount should Cory report as its estimated warranty liability at December 31, 2006? PO c. P42,000 d. P58,000 a. b. P16,000

FINANCIAL ACCOUNTING
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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Maps During 2005, Cory Company introduced a new line of machines that carry a two-year warranty against manufacturer's defects. Based on industry experience, the estimated warranty costs related to peso sales are as follows: Year of sale 4% Year after sale 6% Sales and actual warranty expenditures for the years ended December 31, 2005 and 2006 were as follows: Actual warranty Sales expenditures 2005 2006 500,000 700,000 P 15,000 47,000 Pl,200,000 P 62,000 What amount should Cory report as its estimated warranty liability at December 31, 2006? PO b. P16,000 c. P42,000 d. P58,000 2.
Transcribed Image Text:Maps During 2005, Cory Company introduced a new line of machines that carry a two-year warranty against manufacturer's defects. Based on industry experience, the estimated warranty costs related to peso sales are as follows: Year of sale 4% Year after sale 6% Sales and actual warranty expenditures for the years ended December 31, 2005 and 2006 were as follows: Actual warranty Sales expenditures 2005 2006 500,000 700,000 P 15,000 47,000 Pl,200,000 P 62,000 What amount should Cory report as its estimated warranty liability at December 31, 2006? PO b. P16,000 c. P42,000 d. P58,000 2.
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