S11-3 Accounting for warranty expense and warranty payable Toyota, the car manufacturer, guarantees its vehicles for three years or 100 000 kilometres, whichever comes first. Suppose Toyota's experience indicates that it can expect warranty costs to equal 3% of sales. Assume that Thomson Toyota in Adelaide makes sales of Toyota Corollas totalling $500 000 during 2016, its first year of operations. The business receives cash for 30% of the sales and loans receivable for the remainder. Payments to satisfy customer warranty claims totalled $10000 during 2016. (These payments are not reimbursed by Toyota.) Requirements 1 Record the sales, warranty expense and warranty payments for Thomson Toyota. 2 Post to the Estimated warranty payable T-account. At the end of 2016, how much in warranty costs does Thomson Toyota still expect to pay?

S11-3 Accounting for warranty expense and warranty payable Toyota, the car manufacturer, guarantees its vehicles for three years or 100 000 kilometres, whichever comes first. Suppose Toyota's experience indicates that it can expect warranty costs to equal 3% of sales. Assume that Thomson Toyota in Adelaide makes sales of Toyota Corollas totalling $500 000 during 2016, its first year of operations. The business receives cash for 30% of the sales and loans receivable for the remainder. Payments to satisfy customer warranty claims totalled $10000 during 2016. (These payments are not reimbursed by Toyota.) Requirements 1 Record the sales, warranty expense and warranty payments for Thomson Toyota. 2 Post to the Estimated warranty payable T-account. At the end of 2016, how much in warranty costs does Thomson Toyota still expect to pay?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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