Electro Company makes battery powered ebikes. They cost $1,600 to make which consists of $400 labor and $1,200 parts. They are sold with a one-year unlimited warranty on parts only (customer pays labor) and this year Electro sold 6,600 bikes. Experience shows that 10% of bikes make a warranty claim and the average claim is $69. At year end 358 bikes from this year's sales have already made a claim. Required 1: Assume there were no other transactions in the year, what is the amount credited on Estimated Liability for Product Warranties when doing the year end AJE? $ Required 2: Assume there were no other transactions in the year, what is the amount of Warranty expense reported in the income statement for the year? $ Required 3: Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year? $

Electro Company makes battery powered ebikes. They cost $1,600 to make which consists of $400 labor and $1,200 parts. They are sold with a one-year unlimited warranty on parts only (customer pays labor) and this year Electro sold 6,600 bikes. Experience shows that 10% of bikes make a warranty claim and the average claim is $69. At year end 358 bikes from this year's sales have already made a claim. Required 1: Assume there were no other transactions in the year, what is the amount credited on Estimated Liability for Product Warranties when doing the year end AJE? $ Required 2: Assume there were no other transactions in the year, what is the amount of Warranty expense reported in the income statement for the year? $ Required 3: Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year? $

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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