On January 1, 2021, ACORN Company offered a three-year warranty from date of sale on any of its products sold after that date. The offer was part of a program to increase sales. Meeting the terms of the warranty was expected to cost 2% of sales. Sales made under warranty in 2021 amounted to ₱9,000,000. One fifth of the units sold in 2021 were returned. These units were repaired or replaced at a cost of ₱32,500. What amount of warranty expense should be shown on ACORN’s 2021 income statement? A. ₱ 35,500 B. ₱ 68,500 C. ₱ 32,500 D. ₱ 180,000
On January 1, 2021, ACORN Company offered a three-year warranty from date of sale on any of its products sold after that date. The offer was part of a program to increase sales. Meeting the terms of the warranty was expected to cost 2% of sales. Sales made under warranty in 2021 amounted to ₱9,000,000. One fifth of the units sold in 2021 were returned. These units were repaired or replaced at a cost of ₱32,500. What amount of warranty expense should be shown on ACORN’s 2021 income statement? A. ₱ 35,500 B. ₱ 68,500 C. ₱ 32,500 D. ₱ 180,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, ACORN Company offered a three-year warranty from date of sale on any of its products sold after that date. The offer was part of a program to increase sales. Meeting the terms of the warranty was expected to cost 2% of sales. Sales made under warranty in 2021 amounted to ₱9,000,000. One fifth of the units sold in 2021 were returned. These units were repaired or replaced at a cost of ₱32,500. What amount of warranty expense should be shown on ACORN’s 2021 income statement? A. ₱ 35,500 B. ₱ 68,500 C. ₱ 32,500 D. ₱ 180,000 |
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