During 2011, Rex Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales are P6,000,000for 2011 and P10,000,000 for 2012. Actual warranty expenditures are P90,000 for 2011 and P300,000 for 2012. On December 31, 2012, what is the estimated warranty liability? a. 570,000 b. 100,000 c. 450,000 d. 0

During 2011, Rex Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales are P6,000,000for 2011 and P10,000,000 for 2012. Actual warranty expenditures are P90,000 for 2011 and P300,000 for 2012. On December 31, 2012, what is the estimated warranty liability? a. 570,000 b. 100,000 c. 450,000 d. 0

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 24Q: Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms...

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During 2016, Namnama Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 4% within 12 months following sale and 6% in the second 12 months following sale. The entity reported sales of P5,000,000 for 2016 and P6,000,000 for 2017. The actual expenditures incurred amounted to P150,000 for 2016 and P550,000 for 2017. 1. What is the warranty expense for 2016? a. 500,000 b. 200,000 c. 250,000 d. 300,000 2. What is the estimated warranty liability on December 31, 2016? a. 350,000 b. 150,000 c. 100,000 d. 50,000 3. What is the warranty expense for 2017? a. 650,000 b. 600,000 c. 500,000 d. 550,000 4. What is the estimated warranty liability on December 31, 2017? a. 360,000 b. 400,000 c. 240,000 d. 100,000
During 2008, Luciana Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 3% within 12 months following sale and 5% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2007 and 2008 are as follows: Sales Actual expenditures 2007 40,000,000 1,000,000 2008 50,000,000 4,000,000 At December 31, 2008, Luciana would report estimated warranty liability of O None of these O 2,200,000 O 1,500,000 O 2,500,000
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