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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At the end of 2022, the following information is available for Great Adventures. Additional interest for five months needs to be accrued on the $32,200, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31. Assume that $12,200 of the $32,200 loan discussed above is due next year. By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $27,200 during the year and recorded those as Deferred Revenue. Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $14,200. For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $6,200. No Date General Journal Debit Credit 1 Dec 31 Interest Expense 805 Interest Payable 805…
Lindy Appliance begins operations in 2021 and offers a one-year warranty on all products sold. Total appliance sales in 2021 are $1,600,000, and Lindy estimates future warranty costs in 2022 to be 2% of current sales. Actual warranty costs in 2022 are $25,000. Also in 2022, Lindy has additional sales of $2,400,000 and revises its estimate of warranty costs associated with sales in 2022 to be 1.5%.Required:1. Record the adjusting entry for estimated warranty costs at the end of 2021.2. Record the summary entry for actual warranty expenditures in 2022, assuming all costs were paid in cash.3. Record the adjusting entry for estimated warranty costs at the end of 2022.4. What is the balance in Warranty Liability at the end of 2021 and 2022?
Refer to the photo
Early in 2020, Carla Equipment Company sold 500 Rollomatics at $6,100 each. During 2020, Carla spent $22,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All sales transactions are on a cash basis. Prepare 2020 entries for Carla. Assume that Carla estimates the total cost of servicing the warranties in the second year will be $30,000. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date 10 Account Titles and Explanation Debit Credit
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Ivanhoe Factory provides a 2-year warranty with one of its products which was first sold in 2020. Ivanhoe sold $909,800 of products subject to the warranty. Ivanhoe expects $124,480 of warranty costs over the next 2 years. In that year, Ivanhoe spent $73,090 servicing warranty claims. Prepare Ivanhoe's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date 2020 During 2020 12/31/20 Account Titles and Explanation (To record sales) (To record warranty claims) Debit Credit
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