During 2020, Polly started manufacturing and selling a new product with a three-year warranty. Polly preparesannual AJES once each year as 12-31. Based upon past experience with comparable products, Polly estimated thefollowing warranty costs as a % of sales dollars:2%First year of warrantySecond year of warrantyThird year of warrantyPolly's sales during 2020 and 2021, respectively, were $600,000 and $720,000. Polly's actual warranty expenditures for 2020and 2021, respectively, were $5,000 and $21,000..What was Polly's estimated warranty expense amount for 2021?What was Polly's estimated warranty liability amount as of 12-31-21?3%5%.

Warranty is a form and type of assurance being given by the seller to the buyer that in case,…

During 2020, Polly started manufacturing and selling a new product with a three-year warranty. Polly prepares annual AJES once each year as of 12-31. Based upon past experience with comparable products, Polly estimated the following warranty costs as a % of sales dollars: First year of warranty 2% 3% 5% Second year of warranty Third year of warranty Polly's sales during 2020 and 2021, respectively, were $600,000 and $720,000. Polly's actual warranty expenditures for 2020 and 2021, respectively, were $5,000 and $21,000. • What was Polly's estimated warranty expense amount for 2021? 41 What was Polly's estimated warranty liability amount as of 12-31-21? .

During 2020, Polly started manufacturing and selling a new product with a three-year warranty. Polly prepares annual AJES once each year as of 12-31. Based upon past experience with comparable products, Polly estimated the following warranty costs as a % of sales dollars: First year of warranty 2% 3% 5% Second year of warranty Third year of warranty Polly's sales during 2020 and 2021, respectively, were $600,000 and $720,000. Polly's actual warranty expenditures for 2020 and 2021, respectively, were $5,000 and $21,000. • What was Polly's estimated warranty expense amount for 2021? 41 What was Polly's estimated warranty liability amount as of 12-31-21? .

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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Moon Co. sells food blenders. During 2019, Moon made 37,000 blenders at an average cost of $80. It sold out 25,000 food blenders at an average price of $130. Moon provides a 2-year warranty for each blender sold and estimates 9% of blenders will be returned for warranty with an estimated cost of $36 each. By the end of 2019, Moon has spent $44,000 servicing the warranty repairs. All the above transactions have been settled in cash. During 2019, Moon has 50 employees who work 5-day per week and get paid each other Friday. Salaries of $324,000 and payroll expense of $37,000 have been paid until December 22. Since the business grows quickly, Moon needs cash to expand. By the end of 2018, the Board of Directors authorized the management to issue 10-year bonds with a par value of $3,000,000, annual contract interest rate of 8% and semi-annual interest payments. Moon chose to use the straight-line method to amortize discount or premium on its bonds. On January 1, 2019, management…