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 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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