During 2021, Blevert Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 1% of sales in theyear of sale, 4% in the year after sale, and 5% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows202120222023Sales$400,0001,400,0002,400,000$4,200,000Actual WarrantyExpenditures4,00026,000110,000$140,000What amount should Blevert report as warranty expense for 2021?A. $36,000B. $40,000C. $4,000D. $44,000

Approach to solving the question:This question can be solved by following a cost accounting approach…

Answered: During 2021, Blevert Co. introduced a…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 56BE

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Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?
During 2021, JJJ Co. introduced a new line of machines that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows:Sales / Actual Warranty / Expenditures2021 / 600,000 / 9,0002022 / 1,500,000 / 65,0002023 / 2,100,000 / 135,000What amount should JJJ report as a liability at December 31, 2023?
During 2019, Angel Co. introduced a new line of appliances that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows:           Sales                            Actual Warranty Expenditures2019   P   400,000                                          P   6,0002020 1,000,000                                               30,0002021     1,400,000                                               90,000   P2,800,000                                          P126,000 assume that sales and repairs occurs evenly through-out the year, how much is the estimated warranty liability at December 31, 2021?
During 2021, Eaton Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2021 and 2022 are as follows: Sales Actual Warranty Expenditures 2021 P   800,000 P12,000 2022 1,000,000 30,000 P1,800,000 P42,000 At December 31, 2022, Eaton should report an estimated warranty liability of
During 2019, Bonita Industries introduced a new line of machines that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 1% of sales in the year of sale, 2% in the year after sale, and 3% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2019 $ 1394000 $ 24000 2020 997000 38000 2021 1394000     90000 $ 3785000 $ 152000 What amount should Bonita report as a liability at December 31, 2021? $ 35820 $0 $ 75100 $ 13940
Grouper Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-3% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warranty expenditures for the first three years of business were: Sales Warranty Expenditures 2021 $870,000 $17,100 2022 1,010,000 48,400 2023 1,041,000 80,000 (a) Calculate the amount that Grouper should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 SFP using the assurance-type warranty (expense-based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to the rates above. Warranty expense $ Warranty liability $
During 2018, Stable Company introduced a new line of product that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2018 P 400,000 P 6,000 2019 1,000,000 40,000 2020 1,400,000 90,000 P2,800,000 P136,000 What amount should Stable report as estimated warranty liability at December 31, 2020? What amount of warranty expense should be reported for 2019?
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During 2020, Red 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. Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021 are as follows: Sales Actual Expenditures2020 P5,000,000 P150,0002021 6,000,000 550,000At December 31, 2021, what would be reported as estimated warranty liability?a. P360,000 b. P400,000 c. P240,000 d. P50,000
In 2020, KD Corporation began selling a new line of products that carry a two-year warranty against defects.Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows:First year of warranty 2%Second year of warranty 5%Sales and actual warranty expenditures for 2020 and 2021 are presented below: 2020 2021Sales P900,000 P1,200,000Actual warranty expenditures 30,000 60,000What is the estimated warranty liability at the end of 2021?a. P87,000 b. P24,000 c. P57,000 d. P147,000
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