In 2020, KD Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2020 and 2021 are presented below: 2020 2021 Sales P900,000 P1,200,000 Actual warranty expenditures 30,000 60,000 What is the estimated warranty liability at the end of 2021? a. P87,000 b. P24,000 c. P57,000 d. P147,000

In 2020, KD Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2020 and 2021 are presented below: 2020 2021 Sales P900,000 P1,200,000 Actual warranty expenditures 30,000 60,000 What is the estimated warranty liability at the end of 2021? a. P87,000 b. P24,000 c. P57,000 d. P147,000

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 10E

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