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.
During 2024, Foxfire Company introduced a new line of machines that carry a three-year warranty against defects. Based on experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale. Sales were P1,200,000, P3,000,000 and P4,200,000 for 2024, 2025, and 2026, respectively. Actual warranty expenditures were P18,000, P90,000 and P270,000 for 2024, 2025 and 2026, respectively. What amount should be reported as warranty liability on December 31, 2026?
Green Company started business in 2020. It sells printers with a three-year warranty. Green 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 P 5,000 per unit. The company also incurred actual repair costs of P530,000 and P 1,176,000 in 2020 and 2021, respectively. What amount should Green report as warranty expense in 2020? A.P 3,970,000B.P 4,500,000C.P 5,040,000D.P 7,834,000
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?
ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC corporation 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 2019 and 2020, the company was able to sell 7,500 units and 8,400 units, respectively at a selling price of P 5,000 per unit. The company also incurred actual repair costs of P 530,000 and P 1,176,000 in 2019 and 2020, respectively.What amount should ABC Corporation report as warranty expense in 2019?
Keaton Inc. sells stability balls for $30/each. Each ball comes with a two year warranty. Keaton accrues warranty expense at a rate of 1.5% of sales dollars. Their cost to replace damaged and defective stability balls under warranty is $7 per ball. In June 2023, Keaton sold 1,000 stability balls. What is the dollar value of Keaton's June sales? How much should cooper record was Warranty Expense for June? Prepare the journal entry to record June's Warranty Expense. DR: CR: In the month of August, 2023, 25 balls were returned under the warranty. Prepare the journal entry to record the replacement of the returned balls. DR: CR:
Moon Co. sells food blenders. During 2022, Moon made 37,000 blenders at an average cost of $80. It sold out 25,000 food blenders at an average price of $130. Moon provides a 2-year warranty for each blender sold and estimates that 9% of blenders will be returned for warranty with an estimated cost of $36 each. By the end of 2022, Moon has spent $44,000 servicing the warranty repairs. All the above transactions have been settled in cash. During 2022, Moon has 50 employees who work 5-day per week and get paid each other Friday. By December 22, 2022, Moon has paid salaries of $324,000 and payroll tax expenses of $37,000 for the year.Since the business grows quickly, Moon needs cash to expand. By the end of 2021, the Board of Directors authorized the management to issue 10-year bonds with a par value of $3,000,000, an annual contract interest rate of 8%, and semi-annual interest payments. Moon chose to use the straight-line method to amortize discounts or premiums on its bonds. On…
At the beginning of 2018, Angel Corporation began offering a two-year warranty on its products. The warranty program was expected to cost Angel 4% of net sales. Net sales made under warranty in 2018 were $180 million. Fifteen percent of the units sold were returned in 2018 and repaired or replaced at a cost of $5.3 million. The amount of warranty expense on Angel's 2018 income statement is: $5.3 million. $7.2 million. $10.6 million. $27.0 million.
Right Answer
Moon Co. sells food blenders. During 2019, Moon made 37,000 blenders at an average cost of $80. It sold out 25,000 food blenders at an average price of $130. Moon provides a 2-year warranty for each blender sold and estimates 9% of blenders will be returned for warranty with an estimated cost of $36 each. By the end of 2019, Moon has spent $44,000 servicing the warranty repairs. All the above transactions have been settled in cash. During 2019, Moon has 50 employees who work 5-day per week and get paid each other Friday. Salaries of $324,000 and payroll expense of $37,000 have been paid until December 22. Since the business grows quickly, Moon needs cash to expand. By the end of 2018, the Board of Directors authorized the management to issue 10-year bonds with a par value of $3,000,000, annual contract interest rate of 8% and semi-annual interest payments. Moon chose to use the straight-line method to amortize discount or premium on its bonds. On January 1, 2019, management…
Moon Co. sells food blenders. During 2019, Moon made 37,000 blenders at an average cost of $80. It sold out 25,000 food blenders at an average price of $130. Moon provides a 2-year warranty for each blender sold and estimates 9% of blenders will be returned for warranty with an estimated cost of $36 each. By the end of 2019, Moon has spent $44,000 servicing the warranty repairs. All the above transactions have been settled in cash. During 2019, Moon has 50 employees who work 5-day per week and get paid each other Friday. Salaries of $324,000 and payroll expense of $37,000 have been paid until December 22. Since the business grows quickly, Moon needs cash to expand. By the end of 2018, the Board of Directors authorized the management to issue 10-year bonds with a par value of $3,000,000, annual contract interest rate of 8% and semi-annual interest payments. Moon chose to use the straight-line method to amortize discount or premium on its bonds. On January 1, 2019, management…
Moon Co. sells food blenders. During 2019, Moon made 37,000 blenders at an average cost of $80. It sold out 25,000 food blenders at an average price of $130. Moon provides a 2-year warranty for each blender sold and estimates 9% of blenders will be returned for warranty with an estimated cost of $36 each. By the end of 2019, Moon has spent $44,000 servicing the warranty repairs. All the above transactions have been settled in cash. During 2019, Moon has 50 employees who work 5-day per week and get paid each other Friday. Salaries of $324,000 and payroll expense of $37,000 have been paid until December 22. Since the business grows quickly, Moon needs cash to expand. By the end of 2018, the Board of Directors authorized the management to issue 10-year bonds with a par value of $3,000,000, annual contract interest rate of 8% and semi-annual interest payments. Moon chose to use the straight-line method to amortize discount or premium on its bonds. On January 1, 2019, management issued…