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e amount of warranty expense-

e amount of warranty expense-

FINANCIAL ACCOUNTING
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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This lesson is under non-financial liabilities.

3. MISTER NEGATIVE Co. sells televisions with a 2-year warranty which is attached to the contract and customers need no payment for the warranty to proceed. Past experience indicates that 2% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is estimated to be P100 per unit. During 2021, 6,000 units were sold at an average price of P 4,000. During the year, repairs were made on 35 units at a cost of P20,000. Compute the amount of warranty expense.
Transcribed Image Text:3. MISTER NEGATIVE Co. sells televisions with a 2-year warranty which is attached to the contract and customers need no payment for the warranty to proceed. Past experience indicates that 2% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is estimated to be P100 per unit. During 2021, 6,000 units were sold at an average price of P 4,000. During the year, repairs were made on 35 units at a cost of P20,000. Compute the amount of warranty expense.
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