Pharoah Company sold 10,100 Super-Spreaders on December 31, 2025, at a total price of $1,070,600, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $585,800. The assurance warranties extend for a 2-year period and are estimated to cost $36,600. Pharoah also sold extended warranties (service-type warranties) related to 2,000 spreaders for 2 years beyond the 2-year period for $12,000. Given this information, determine the amounts to report for the following at December 31, 2025: sales revenue, warranty expense, unearned warranty revenue, warranty liability, and cash. Amounts Reported in Income $ Amounts Reported on the Balance Sheet $

Pharoah Company sold 10,100 Super-Spreaders on December 31, 2025, at a total price of $1,070,600, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $585,800. The assurance warranties extend for a 2-year period and are estimated to cost $36,600. Pharoah also sold extended warranties (service-type warranties) related to 2,000 spreaders for 2 years beyond the 2-year period for $12,000. Given this information, determine the amounts to report for the following at December 31, 2025: sales revenue, warranty expense, unearned warranty revenue, warranty liability, and cash. Amounts Reported in Income $ Amounts Reported on the Balance Sheet $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sanaz Corporation sells computers under a 3-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2020, the corporation sells for cash 700 computers at a unit price of $2,000. On the basis of past experience, the3-year warranty costs are estimated to be $130 for parts and $170 for labor per unit.(For simplicity, assume that all sales occurred on December 31, 2020.) The warranty is not sold separately from the computer. Required a. Record any necessary journal entries in 2020.b. What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified?c. In 2021, the actual warranty costs to Sanaz Corporation were $30,500 for parts and $45,100 for labor. Record any necessary journal entries in 2021
Pharoah Company sold 10,500 Super-Spreaders on December 31, 2025, at a total price of $987,000, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $588,000. The assurance warranties extend for a 2-year period and are estimated to cost $38,600. Pharoah also sold extended warranties (service-type warranties) related to 2,000 spreaders for 2 years beyond the 2-year period for $12,000. Given this information, determine the amounts to report for the following at December 31, 2025: sales revenue, warranty expense, unearned warranty revenue, warranty liability, and cash. Amounts Reported in Income $ Amounts Reported on the Balance Sheet $
Lindy Appliance begins operations in 2021 and offers a one-year warranty on all products sold. Total appliance sales in 2021 are $1,600,000, and Lindy estimates future warranty costs in 2022 to be 2% of current sales. Actual warranty costs in 2022 are $25,000. Also in 2022, Lindy has additional sales of $2,400,000 and revises its estimate of warranty costs associated with sales in 2022 to be 1.5%.Required:1. Record the adjusting entry for estimated warranty costs at the end of 2021.2. Record the summary entry for actual warranty expenditures in 2022, assuming all costs were paid in cash.3. Record the adjusting entry for estimated warranty costs at the end of 2022.4. What is the balance in Warranty Liability at the end of 2021 and 2022?
Extravagant Company, which uses IFRS, sells home appliances. On January 1, 2024, it sells a fridge to a customer for $5,300 cash and, as part of a promotion, Extravagant gives the customer a free 15- month extended warranty (service-type warranty). The fridge also has a 9-month assurance-type warranty, which is estimated to cost Extravagant 4% of sales revenue. Assume that the 15-month extended warranty begins after the 9-month assurance-type warranty has expired, so the customer effectively receives 24 months of warranty coverage. Additional information follows: (a) The fridge, if sold by itself, would normally sell for $5,100. The cost of the fridge to Extravagant, based on a first-in first-out (FIFO) perpetual inventory system, is $1,900. (b) The extended warranty, if sold by itself, would normally sell for $1,275. Required: (A) Prepare the journal entry/entries that should be recorded on January 1, 2024. (B) How much Operating Income would be reported by Extravagant for the…
Blossom Company sold 10,500 heavy-duty spreaders on July 1, 2023, at a total price of $1,850,000, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $420,000. The assurance warranties extend for a two-year period and are estimated to cost $38,000. Blossom also sold extended warranties (service-type warranties) related to 1.500 spreaders for two years beyond the two-year period for $13,500. Prepare the journal entries that Blossom should make in 2023 related to the sale and the related warranties. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Date July 1, 2023 July 1, 2023 Account Titles and Explanation (To record cash sale) I (To record the cost of goods sold). Debit Credit 100 10
EZ Wheels Corporation manufactures kick scooters. The company offers a one-year warranty on all scooters. During the year, the company recorded net sales of $2,850 million. Historically, about 4% of all sales are returned under warranty and the cost of repairing and or replacing goods under warranty is about 30% of retail value. Assume that at the start of the year EZ Wheels’ balance sheet included an accrued warranty liability of $24.5 million and at the end of the year, the accrued warranty liability balance was $18.6 million. How much did EZ Wheels pay during the year to repair and/or replace scooters under warranty? Select one: a. None of these are correct. b. $40.1 million c. $34.2 million d. $114.0 million e. $18.6 million
cvcrrrr
Carla Vista Resellers Ltd. (CVRL) sells gently used and refurbished appliances. The company provides a three-month warranty that is included in the cost of the appliance. Claims under the warranties vary from replacing defective parts to providing customers with new appliances if repairs cannot be made. During 2024, the estimated cost related to the three-month warranties was $36,480, of which $24,000 had been incurred before year end ($18,240 on replacement appliances and $5,760 for parts). For an additional charge of $144, CVRL also offers extended warranty coverage for three years on its refurbished appliances. This amount is expected to cover the costs associated with the extended warranties. During 2024, CVRL sold 480 three-year warranty plans. The costs incurred during the year for repairs and replacements under these plans amounted to $14,400. Based on experience, the company estimates that its total warranty costs over the three-year coverage period will be $43,200, which it…
Subject - account Please help me. Thankyou.
Adams, Inc. sells widgets that come with an unconditional five-year warranty. According to Adams' best estimates, 7.8% of all units sold will require repair or replacement under that warranty, and the average cost of honoring one warranty claim is $60. During 2023, Adams' first year of operations, 176,000 widgets were sold, 1,278 of which were repaired or replaced under warranty claims. On its December 31, 2023 balance sheet, what amount of warranty liability will Adams report?
Woodmier Lawn Products introduced a new line of commercial sprinklers in 2023 that carry a one-year warranty against manufacturer's defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experience of others in the industry. Based on that experience, warranty costs were expected to approximate 2% of sales. Sales of the sprinklers in 2023 were $2.8 million. Accordingly, the following entries relating to the contingency for warranty costs were recorded during the first year of selling the product: General Journal Accrued liability and expense Warranty expense (2% × $2,800,000) Warranty liability Actual expenditures (summary entry) Warranty liability Cash Debit 56,000 Required 1 Required 2 25,000 Credit 56,000 In late 2024, the company's claims experience was evaluated and it was determined that claims were far more than expected-3% of sales rather than 2%. View transaction list 25,000 Required: 1. Assuming…
On December 31, 2023, Sablok Company sells production equipment to Tang Inc. for $50,000. Sablok includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2023. Sablok estimates the prices to be $48,800 for the equipment and $1,200 for the cost of warranty. Instructions Are the sale of the equipment and the warranty separate performance obligations within the contract? Explain. Prepare a single compound journal entry to record this transaction on December 31, 2024. Ignore any related cost of goods sold entry. Repeat the requirements for part (b), assuming that, in addition to the assurance warranty, Sablok sold an extended warranty (service-type warranty) for an additional two years (2024–2025) for $800. (Hint: Use unearned revenue).