Selected information related to warranties provided by IBM follows (in millions of U.S. dollars):Net revenuesStandard warranty liability, end of yearCharges incurred during the yearExtended warranty deferred revenue, end of yearRevenue deferred for new extended warranty contracts201820172016$81,591 $81,139 $81,919158163573260192205606307196204571303 3-a. Compute the ratio of the warranty expense to net revenues for the three years. The Standard warranty liability had a balance of$221 at the beginning of 2016. (Round percentage answers to 2 decimal places (i.e., 0.1243 should be entered as 12.43).)Ratio of warranty expense to net revenues2018%2017%2016%

A warranty expense is the expense of repairing, replacing, or compensating a consumer for any…

Selected information related to warranties provided by IBM follows (in millions of U.S. dollars): 2018 2017 2016 $81,591 $81,139 $81,919 Net revenues Standard warranty liability, end of year Charges incurred during the year Extended warranty deferred revenue, end of year Revenue deferred for new extended warranty contracts 158 163 573 260 192 205 606 307 196 204 571 303

Selected information related to warranties provided by IBM follows (in millions of U.S. dollars): 2018 2017 2016 $81,591 $81,139 $81,919 Net revenues Standard warranty liability, end of year Charges incurred during the year Extended warranty deferred revenue, end of year Revenue deferred for new extended warranty contracts 158 163 573 260 192 205 606 307 196 204 571 303

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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problem and solution is already provided I just have some questions how does the predicted warranty expense ( the last part and it is also highlited) computed? answer: Total warranty expense of both the years is computed using the equation given below: Total warranty expense = {Total sales of 2014 + Total sales of 2015} × {Warranty rate of first and second year} = {P 4,200,000 + P 6,960,000} × {3% + 5%} = P 11,160,000 × 8% = P 892,800 Estimated warranty liability on December 31, 2015 is computed using the equation given below: Estimated warranty liability = Total warranty expense - Actual warranty expenditure of 2014 & 2015 = P 892,800 - {P 148,800 + P 180,000} = P 564,000 Hence, the estimated warranty liability on December 31, 2015 should be P 564,000. Step 2 b).Predicted…
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Net revenues Standard warranty liability, end of year 158 Charges incurred during the year 163 Extended warranty deferred revenue, end of year 573 Revenue deferred for new extended warranty contracts 260 Warranty expense Required: 1. Compute the amount of warranty expense for 2017 and 2018. (Enter your answers in millions of dollars.) No 1 View transaction list View journal entry worksheet 2 2018 2. Prepare journal entries to record both the warranty expense for 2018 and the payments made under the warranty during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions of dollars.) Transaction A 2017 B 2018 2017 2016 $81,591 $81, 139 $81,919 192 205 606 307 Warranty expense Estimated warranty liability Estimated warranty liability Cash 196 204 571 303 General Journal Debit Credit Ⓒ
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