In 2018, Bare company began selling a new calculator that carried a two-year warranty against defects. Bare projected the estimated warranty (as a percent of sales) as follows: First year of warranty 4% Second year of warranty 10% Sales and actual warranty repairs were: 2018 2019 Sales 5,000,000 9,000,000 Actual warranty repairs 200,000 560,000 How much is the amount of estimated liability for warranties on December 31, 2018?

In 2018, Bare company began selling a new calculator that carried a two-year warranty against defects. Bare projected the estimated warranty (as a percent of sales) as follows: First year of warranty 4% Second year of warranty 10% Sales and actual warranty repairs were: 2018 2019 Sales 5,000,000 9,000,000 Actual warranty repairs 200,000 560,000 How much is the amount of estimated liability for warranties on December 31, 2018?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

jj
Hazel Gird's products come with a one-year warranty. In 2014, sales totaled 2,500 units. It is expected that warranty repairs will average 10 per unit sold, with 30 percent of repairs completed in 2014 and 70 percent completed in 2015. How much warranty expense should Searches include in its 2014 income statement? Show solution.
Best Appliance Store offers a two-year warranty on all appliances sold. The company estimates that 5% of all appliances sold need to be serviced at an average cost of $50 each. At December 31, 2020, the Warranty Liability account had a balance of $19,000. During 2021, the store spends $10,000 repairing 200 appliances. An additional 3,500 appliances are sold in 2021. On the 2021 income statement, warranty expense will be: a. $8,750 Cb. $10,000 C. $8,500 d. $9,000
Hansaben
p39
Please help me. Thankyou.
p57
Lindy Appliance begins operations in 2021 and offers a one-year warranty on all products sold. Total appliance sales in 2021 are $1,600,000, and Lindy estimates future warranty costs in 2022 to be 2% of current sales. Actual warranty costs in 2022 are $25,000. Also in 2022, Lindy has additional sales of $2,400,000 and revises its estimate of warranty costs associated with sales in 2022 to be 1.5%.Required:1. Record the adjusting entry for estimated warranty costs at the end of 2021.2. Record the summary entry for actual warranty expenditures in 2022, assuming all costs were paid in cash.3. Record the adjusting entry for estimated warranty costs at the end of 2022.4. What is the balance in Warranty Liability at the end of 2021 and 2022?
Pharoah Company offers a five-year warranty on its products. Pharoah previously estimated warranty costs to be 3% of sales but in 2025 revised this estimate to 1% due to process and quality control improvements. Pharoah reported warranty costs of $80100 on $2670000 of sales in 2023 and $95100 on $3170000 in 2024 . Sales revenue for 2025 was $5170000. What is the adjustment to retained earingings in 2025?
Refer to the photo
F
Cupola Awning Corporation introduced a new line of commercial awnings in 2024 that carry a two-year warranty against manufacturer’s defects. Based on their experience with previous product introductions, warranty costs are expected to approximate 3% of sales. Sales and actual warranty expenditures for the first year of selling the product were: Sales Actual Warranty Expenditures $ 5,000,000 $ 37,500 Required: Does this situation represent a loss contingency? Prepare journal entries that summarize sales of the awnings (assume all credit sales) and any aspects of the warranty that should be recorded during 2024. What amount should Cupola report as a liability at December 31, 2024?