Piefer Company sells refrigerators with an embedded 3-year warranty. During 2022, Piefer sold 15,000 refrigerators of which, 6 percent are estimated to need some sort of repair under the warranty period. The best estimate is that each repair will average $40. No warranty repairs were made in 2022 for these sales. At the end of 2023, repairs under warranty totaled $14,000 and an analysis revealed that Piefer may need to spend $25,000 for repairs in the coming year under the warranty. Record the repairs performed in 2023

Piefer Company sells refrigerators with an embedded 3-year warranty. During 2022, Piefer sold 15,000 refrigerators of which, 6 percent are estimated to need some sort of repair under the warranty period. The best estimate is that each repair will average $40. No warranty repairs were made in 2022 for these sales. At the end of 2023, repairs under warranty totaled $14,000 and an analysis revealed that Piefer may need to spend $25,000 for repairs in the coming year under the warranty. Record the repairs performed in 2023

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 10E

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Piefer Company sells refrigerators with an embedded 3-year warranty. During 2022, Piefer sold 15,000 refrigerators of which, 6 percent are estimated to need some sort of repair under the warranty period. The best estimate is that each repair will average $40. No warranty repairs were made in 2022 for these sales. At the end of 2023, repairs under warranty totaled $14,000 and an analysis revealed that Piefer may need to spend $25,000 for repairs in the coming year under the warranty. A. Record warranty expense in 2022.B. Record the repairs performed in 2023. C. Record the journal entry necessary to report the correct balance in warranty payable at the end of 2023.
Pronghorn Computer Company sells computers for $1,800 each, which includes a three-year warranty that requires the company to perform periodic services and to replace defective parts. During 2023, Pronghorn sold 580 computers on account. Based on past experience, the company has estimated the total three-year warranty costs at $80 for parts and $100 for labour. (Assume sales all occur at December 31, 2023.) In 2024, Pronghorn Computer Company incurred actual warranty costs relative to 2023 computer sales of $9,800 for parts and $13,000 for labour. (a) Using the expense warranty approach, prepare the entries to reflect the above transactions (accrual method) for 2023 and 2024. Use Salaries and Wages Payable. (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.) Account Titles and Explanation 2023 (To…
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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…
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Sam company started business in 2020. It sells printers with a three-year warranty. Sam company estimates its warranty cost as a percentage of peso sales. Based on past experience, it is estimated that 2% will be repaired during the first year of warranty, 4% will be repaired during the second year of warranty and 6% will be repaired in the third year. In 2020 and 2021, the company was able to sell 7,500 units and 8,400 units, respectively at a selling price of P5,000 unit. The company also incurred actual repair costs of P530,000 and P1,176,000 in 2020 and 2021, respectively. What amount should Sam Company report as warranty expense in 2020? What is the amount of liability for warranty reported in Sam Company’s December 31, 2021 statement of financial position? Assuming that sales and repair occur evenly throughout the period, how much would be the liability for warranty in the December 31, 2021 statement of financial position?