EXERCISE 6 On January 1,2019, Jackson Company introduced a new line of product that carries a 3 year warranty against actory defects. The product warranties provide assurance that the new line of product will function as intended pased on agreed-upon specifications. Estimated warranty costs related to peso sales are as follows: 1% of sales in the year of sale, 2% of sales in the rear after sale, and 3% of sales in the second year after sale. Sales and warranty expenditures for the period 2019 to 2021 were as follows: | 2021 P 3,500,000 | 2019 P 1,000,000 2020 Sales P 2,500,000 Actual warranty expenditures 8,000 38,000 112,500
EXERCISE 6 On January 1,2019, Jackson Company introduced a new line of product that carries a 3 year warranty against actory defects. The product warranties provide assurance that the new line of product will function as intended pased on agreed-upon specifications. Estimated warranty costs related to peso sales are as follows: 1% of sales in the year of sale, 2% of sales in the rear after sale, and 3% of sales in the second year after sale. Sales and warranty expenditures for the period 2019 to 2021 were as follows: | 2021 P 3,500,000 | 2019 P 1,000,000 2020 Sales P 2,500,000 Actual warranty expenditures 8,000 38,000 112,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:EXERCISE 6
On January 1,2019, Jackson Company introduced a new line of product that carries a 3 year warranty against
factory defects. The product warranties provide assurance that the new line of product will function as intended
based on agreed-upon specifications.
Estimated warranty costs related to peso sales are as follows: 1% of sales in the year of sale, 2% of sales in the
year after sale, and 3% of sales in the second year after sale.
Sales and warranty expenditures for the period 2019 to 2021 were as follows:
2019
|2020
2021
Sales
P 1,000,000
P 2,500,000
P 3,500,000
Actual warranty
expenditures
8,000
38,000
112,500
REQUIRED:
Prepare journal entries to record the foregoing for year 2019 to 2021. The company's reporting period is the
calendar year.
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