CHECK FIGURES: c. $15,470, d. 59,750Shefford Cutlery extends a lifetime replacement warranty on all units sold. Using past experience, thecompany estimates that 0.5% of units sold will be returned and require replacement at an average cost of$130 per unit. On January 1, 2017, the balance in Shefford's Estimated Warranty Liability account was$15,600. During 2017, sales totalled $3,600,000 or 15,000 units. The actual number of units returned andreplaced was 76.Requireda. Prepare the entry to estimate warranty liabilities based on the units sold for 2017. Assume theadjustment is made on December 31.3.2. Record the replacement of the units returned in 2017 (use a date of December 31).Calculate the balance in the Estimated Warranty Liability account at December 31, 2017.What is the warranty expense that will appear on the income statement for the year endedDecember 31, 2017?4.

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Shefford Cutlery extends a lifetime replacement warranty on all units sold. Using past experience, the company estimates that 0.5% of units sold will be returned and require replacement at an average cost of 5130 per unit. On January 1, 2017, the balance in Shefford's Estimated Warranty Liability account was 515,600. During 2017, sales totalled $3,600,000 or 15,000 units. The actual number of units returned and eplaced was 76. Required a. Prepare the entry to estimate warranty liabilities based on the units sold for 2017. Assume the adjustment is made on December 31. 2. Record the replacement of the units returned in 2017 (use a date of December 31). Calculate the balance in the Estimated Warranty Liability account at December 31, 2017. 3. 1876

Shefford Cutlery extends a lifetime replacement warranty on all units sold. Using past experience, the company estimates that 0.5% of units sold will be returned and require replacement at an average cost of 5130 per unit. On January 1, 2017, the balance in Shefford's Estimated Warranty Liability account was 515,600. During 2017, sales totalled $3,600,000 or 15,000 units. The actual number of units returned and eplaced was 76. Required a. Prepare the entry to estimate warranty liabilities based on the units sold for 2017. Assume the adjustment is made on December 31. 2. Record the replacement of the units returned in 2017 (use a date of December 31). Calculate the balance in the Estimated Warranty Liability account at December 31, 2017. 3. 1876

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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During December, Maxum Company sold 3,900 units of a product that carries a 60-day warranty. December sales for this product total $127,000. The company expects 6% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $19. Record the related adjusting entry.
Milima Electronic Company sells on account printers for RM1,500 each with a 2-year warranty for performing periodic services and replacing defective parts. Because of COVID 19 pandemic, the company sold only 700 printers on December 2019, however, based on past experience, the company has estimated the total 2-year warranty costs as RM30 for parts and RM60 for labor. On 2020, Miley incurred actual warranty costs relative to 2019 printer sales of RM10,000 for parts and RM18,000 for labor. REQUIRED: (a) Record the above transactions by using the expense warranty treatment for the years 2019 and 2020. (b) If the company sold printers in cash, what are the amounts of warranty expense for 2019 and 2020? (c) Determine amounts of warranty liability that should be recorded under current liabilities and long-term liabilities for the year 2019?
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