On January 1, 2021, West 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 West's 2021 income statement? a. 68,500 b. 35,500 c. 32,500 d. 180,000
On January 1, 2021, West 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 West's 2021 income statement? a. 68,500 b. 35,500 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, West 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 West's 2021 income statement?
a. 68,500
b. 35,500
c. 32,500
d. 180,000
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