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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 $71. At year end 362 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? $ 21158 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? $ I 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 $71. At year end 362 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? $ 21158 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? $ I 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
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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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 $71. At year end 362 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? $ 21158 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? SI Required 3. Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year? $
Transcribed Image Text: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 $71. At year end 362 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? $ 21158 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? SI Required 3. Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year? $
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