Kiner Equipment Company sells computers for P2,000 each and also gives cach customer a 2-year warranty. During 2004, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs as P40 for parts and P80 for labor. (Assume all sales occur at December 31, 2004 and warranty obligations are expected to be settled evenly throughout the warranty period.) In 2005, Kiner incurred actual warranty costs relative to 2004 computer sales of P10,000 for parts and 24,000 for labor. Requirements: a. The transactions of part (a) create what balance under current liabilities in the 2004 balance sheet?
Kiner Equipment Company sells computers for P2,000 each and also gives cach customer a 2-year warranty. During 2004, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs as P40 for parts and P80 for labor. (Assume all sales occur at December 31, 2004 and warranty obligations are expected to be settled evenly throughout the warranty period.) In 2005, Kiner incurred actual warranty costs relative to 2004 computer sales of P10,000 for parts and 24,000 for labor. Requirements: a. The transactions of part (a) create what balance under current liabilities in the 2004 balance sheet?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kiner Equipment Company sells computers for P2,000 each and also gives cach customer a 2-year warranty. During 2004, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs as P40 for parts and P80 for labor. (Assume all sales occur at December 31, 2004 and warranty obligations are expected to be settled evenly throughout the warranty period.)
In 2005, Kiner incurred actual warranty costs relative to 2004 computer sales of P10,000 for parts and 24,000 for labor.
Requirements:
a. The transactions of part (a) create what balance under current liabilities in the 2004 balance sheet ?
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