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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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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

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