Items 3 to 7 are based on the following information. JACKSON Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music. To promote the sale of its products, JACKSON uses two promotion techniques premiums and warranties. PREMIUMS The premium is offered on the recorded and sheet music. Customers receive a coupon for each P10 spent on recorded music and sheet music. Customers may exchange 200 coupons and P200 for a DVD player. JACKSON pays P340 for each DVD player and estimates that 60% of the coupons given to customers will be redeemed. A total of 6,500 DVD players used in the premium program were purchased during the year and there were 1,200,000 coupons redeemed in 2020. WARRANTIES ACCNTG2♥ | 1 Musical instruments and sound reproduction equipment are sold with a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience, is 2% of sales. Replacement parts and labor for warranty work totalled P1, 640,000 during 2020. JACKSON's sales for 2020 totaled P72,000,000 P54,000,000 from musical instruments and sound reproduction and equipment and P18,000,000 from recorded music and sheet music. The balances in the accounts related to warranties and premiums on January 1, 2020, were as shown below: Inventory of premium DVD players Estimated premium claims outstanding Estimated liability for warranties P 399,500 448,000 1,360,000
Items 3 to 7 are based on the following information. JACKSON Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music. To promote the sale of its products, JACKSON uses two promotion techniques premiums and warranties. PREMIUMS The premium is offered on the recorded and sheet music. Customers receive a coupon for each P10 spent on recorded music and sheet music. Customers may exchange 200 coupons and P200 for a DVD player. JACKSON pays P340 for each DVD player and estimates that 60% of the coupons given to customers will be redeemed. A total of 6,500 DVD players used in the premium program were purchased during the year and there were 1,200,000 coupons redeemed in 2020. WARRANTIES ACCNTG2♥ | 1 Musical instruments and sound reproduction equipment are sold with a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience, is 2% of sales. Replacement parts and labor for warranty work totalled P1, 640,000 during 2020. JACKSON's sales for 2020 totaled P72,000,000 P54,000,000 from musical instruments and sound reproduction and equipment and P18,000,000 from recorded music and sheet music. The balances in the accounts related to warranties and premiums on January 1, 2020, were as shown below: Inventory of premium DVD players Estimated premium claims outstanding Estimated liability for warranties P 399,500 448,000 1,360,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
What is the warranty expense?
A. 1,640,000
B. 1,080,000
C. 800,000
D. 360,000
Transcribed Image Text:Items 3 to 7 are based on the following information.
JACKSON Music Emporium carries a wide variety of musical instruments,
sound reproduction equipment, recorded music, and sheet music. To
promote the sale of its products, JACKSON uses two promotion
techniques premiums and warranties.
PREMIUMS
The premium is offered on the recorded and sheet music. Customers
receive a coupon for each P10 spent on recorded music and sheet music.
Customers may exchange 200 coupons and P200 for a DVD player. JACKSON
pays P340 for each DVD player and estimates that 60% of the coupons
given to customers will be redeemed. A total of 6,500 DVD players used
in the premium program were purchased during the year and there were
1,200,000 coupons redeemed in 2020.
WARRANTIES
ACCNTG2♥ | 1
Musical instruments and sound reproduction equipment are sold with a
one-year warranty for replacement of parts and labor. The estimated
warranty cost, based on past experience, is 2% of sales. Replacement
parts and labor for warranty work totalled P1, 640,000 during 2020.
JACKSON's sales for 2020 totaled P72,000,000 P54,000,000 from
musical instruments and sound reproduction and equipment and
P18,000,000 from recorded music and sheet music. The balances in the
accounts related to warranties and premiums on January 1, 2020, were
as shown below:
Inventory of premium DVD players
Estimated premium claims outstanding
Estimated liability for warranties
P 399,500
448,000
1,360,000
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