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? A 350,000 В 900,000 c) 750,000 250,000
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? A 350,000 В 900,000 c) 750,000 250,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 10RE
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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?
A) 350,000
B) 900,000
c) 750,000
D 250,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F69b30ad6-7663-4290-846d-de111a90c5ce%2Fe106c94d-05d5-43ee-ad94-21c84c817381%2Fsj6p79f_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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?
A) 350,000
B) 900,000
c) 750,000
D 250,000
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