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Entity A manufactures high-end home electronics systems. The entity provides a one-year warranty for all products sold.   The entity estimated that the warranty cost is P200 per unit sold and reported a liability for estimated warranty cost of P650,000 at the beginning of the year.   The entity sold 5,000 units for a total of P9,000,000 and paid warranty claims of P750,000 on current and prior year sales during the current year.   What about should be reported as warranty liability at year-end?   350,000   250,000   750,000   900,000

Entity A manufactures high-end home electronics systems. The entity provides a one-year warranty for all products sold.   The entity estimated that the warranty cost is P200 per unit sold and reported a liability for estimated warranty cost of P650,000 at the beginning of the year.   The entity sold 5,000 units for a total of P9,000,000 and paid warranty claims of P750,000 on current and prior year sales during the current year.   What about should be reported as warranty liability at year-end?   350,000   250,000   750,000   900,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Entity A manufactures high-end home electronics systems. The entity provides a one-year warranty for all products sold.

 

The entity estimated that the warranty cost is P200 per unit sold and reported a liability for estimated warranty cost of P650,000 at the beginning of the year.

 

The entity sold 5,000 units for a total of P9,000,000 and paid warranty claims of P750,000 on current and prior year sales during the current year.

 

What about should be reported as warranty liability at year-end?

 

  1. 350,000

     

  2. 250,000

     

  3. 750,000

     

  4. 900,000

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