Need answer the financial accounting Evergreen Appliance Co. was established to sell a single product with a 90-daywarranty against defects. Engineering estimates suggest that 4% of the unitssold will be defective and require an average repair cost of $50 per unit.During Evergreen's first month of operations, total sales were 500 units, and 8defective units were repaired by the end of the month.What should be the liability for product warranties at the month-end?a. $500b. $600c. $1,000d. $1,200e. None of these

Step 1: Determine the expected defective unitsTotal units sold: 500Estimated defect rate: 4%Expected…

Answered: Evergreen Appliance Co. was established…

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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The goal of Video-Technical, Inc.'s formation was to offer a single product for $600 each with a 60-day warranty against flaws. According to engineering estimations, 5% of the units that are sold will turn out to be faulty and need an average $50 in repairs. $198,000 in sales were made overall in September, although 9 of the devices were later determined to be faulty and had to be fixed. At the conclusion of the month, the accumulated obligation for product guarantees should be: A. $ 850 B. $ 400 C. $ 450 D. $1,150 E. None of the above
Backpack Co. was organized to sell a single product that carries a 45-day warranty againstdefects. Engineering estimates indicate that 2% of the units sold will prove defective andrequire an average repair cost of $60 per unit. During Backpack’s first month of operations,total sales were 900 units; by the end of the month, five defective units had been repaired.The liability for product warranties at month-end should bea. $1,380.b. $300.c. $1,080.d. $780.
Video-Technical, Inc. was organized to sell a single product for $600 per unit, including a 60-day warranty against defects. Engineering estimates indicate that 5% of the units sold will prove defective and require an average repair cost of $50 per unit. During September, total sales were $198,000; 9 units sold during September were found defective and repaired. The accrued liability for product warranties at month-end should be: Select one: a. $ 850 b. $ 400 c. $ 450 d. $1,150 e. None of the above
3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against product defects. Experience indicates that four percent of the units sold will prove defective, requiring an average repair cost of $50 per unit. During the first month of business, product sales were $320,000, and 20 of the units sold were found to be defective and repaired during the month. What is the accrued liability for product warranties at month-end? a $1,000 b. $600 c. $1,600 d. $2,000
Question
Hopewell sells a line of goods under a six-month warranty. Any defect arising during that period is repaired free of charge. Hopewell has calculated that if all the goods sold in the last six months of the year required repairs the cost would be $2 million. If all of these goods had more serious faults and had to be replaced the cost would be $6 million. The normal pattern is that 80% of goods sold will be fault-free, 15% will require repairs and 5% will have to be replaced. What is the amount of the provision required?
Modem Appliances, Inc. sells food processors for $150 with a 120-day warranty against defects. Past experience indicates that 5% of the processors will have some defect during the warranty period and that the necessary repairs and adjustments will cost $25 per defective unit. Sales for August are $225,000. What is the estimated liability for product warranties for units sold in August? Select one: a. $3,000 b. $1,800 C. $11,250 d. $1,875 e. None of the above
Ecco Company sold $136,000 of kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 6% of the sales price. On October 15, a customer required a $100 part replacement, plus $85 labor under the warranty. a. Provide the journal entry for the estimated expense on September 30. If an amount box does not require an entry, leave it blank. b. Provide the journal entry for the October 15 warranty work. If an amount box does not require an entry, leave it blank.
Ecco Company sold $150,000 of kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 7% of the sales price. On October 15, a customer required a $200 part replacement, plus $84 labor under the warranty. a. Journalize the entry for the estimated expense on September 30. If an amount box does not require an entry, leave it blank. fill in the blank 068e4ff7d019fb4_2 fill in the blank 068e4ff7d019fb4_3 fill in the blank 068e4ff7d019fb4_5 fill in the blank 068e4ff7d019fb4_6 b. Journalize the entry for the October 15 warranty work. If an amount box does not require an entry, leave it blank.
Sea Port Company sells a product that carries a 60-day unconditional warranty against product failure. Based on statistical analysis, Sea Port knows that between the time of sale and the lapse of the warranty, 4% of the units sold will fail and require repair at an avenge cost of $40 per unit. The following data reflect the first three months during which the product was sold. October November December Units sold 30,000 36,000 60,000 Known units of product failure From sales of October 480 600 120 November 300 960 December 900 Prepare the general journal entry to record Sea Port’s estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records.

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