81PROBLEMSProblem 3-1 (IAA)repair warranty The sale price for each set is P15,000. Theaverage repair cost per set is P800.Research has shown that 20% of all sets sold are repaired inthế first year and 40% in the second year.20202021300500150,000Number of sets sold40,000Total payments'for warranty repairsRequired:1. Prepare journal entries in connection with the warrantyusing the "expense as incurred" approach.2. Prepare journał entries in connection with the warrantyusing the "accrual" approach.3. Determiņe the estimated warranty liability on December31, 20214. Analyze the estimated warranty liability account toascertain whether actual warranty costs approximate theestimate. The sales and warrantý repairs are made evenlyduring the year.5. Prepare journal entry to correct the estimated warrantyliability on December 31, 2021.82Problem 3-2 (AICPA Adapted)In 2020, Dare Company bęgan selling

Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…

Socorro Company sells color television sets with a two-year repair warranty The sale price for each set is P15,000. The average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in the first year and 40% in the second year. 2020 2021 500 150,000 300 Number of sets sold 40,000 Total payments'for warranty repairs Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journal entries in connection with the warranty using the "accrual" approach. 3. Determine the estimated warranty liability on December 31, 2021 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.

Socorro Company sells color television sets with a two-year repair warranty The sale price for each set is P15,000. The average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in the first year and 40% in the second year. 2020 2021 500 150,000 300 Number of sets sold 40,000 Total payments'for warranty repairs Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journal entries in connection with the warranty using the "accrual" approach. 3. Determine the estimated warranty liability on December 31, 2021 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Fantastic Co. sold $150,000 of kitchen appliances during August under a six month warranty. The cost to repair defects under the warranty is estimated at 5% of the sales price. On September 12, a customer required a $2000 part replacement plus $90 of labor under the warranty. Journal entry to record estimated warranty expenses will be: Select one: a. Provision for product warranty Dr 9,000 Warranty Expenses Cr 9,000 b. Provision for product warranty Dr 2090 Warranty Expenses Cr 2090 c. Right option is not listed d. Warranty Expenses Dr 7,500 Provision for product warranty Cr 7,500
Question: Carrot Company began selling a new generation of cell phones on November 1, 2021. The company offers a 90- day warranty for defective phones. Based on Carrot's experience with previous generations of this phone, they estimate that 2.0% of the units sold will become defective in the warranty period, and that the average cost of replacing or repairing a defective unit is $100. In November, Carrot sold 25,000 units and 500 defective units were returned. In December, Carrot sold 35,000 units and 600 units were returned. The actual cost of replacing the defective units was $110,000. Instructions: a. Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2021. b. Prepare one summary journal entry at December 31, 2021 to record the cost of replacing the defective cell phones returned during November and December. c. What amounts will be included in Carrot's 2021 income statement and balance sheet at December 31, 2021,…
Puzzles Company sells merchandise with a 1-year warranty. In Year 1, sales consisted of 3,700 units. It is estimated that warranty repairs will average $16 per unit sold, and 40% of the repairs will be made in Year 1 and 60% in Year 2. In the income statement for Year 1, Puzzles Company should show warranty expense of a. $35,520. b. $23,680. c. $0. d. $59,200.
Product A comes with a two year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale and 5% in the second year after the sale. The following information relates to sales and warranty expenditures of Product A Actual warranty expenditures $ 10,000 $ 35,000 Year Year 1 Year 2 Sales $400,000 $500,000 Which of the following is NOT part of the required journal entry in Year 1 based on the above information? Multiple Choice Credit cash $10,000 Debit warranty expense $12,000 None of the other alternatives are correct Debit warranty expense $32,000 Credit sales $400,000
cvcrrrr
Subject - account Please help me. Thankyou.
C9
Catskills guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 7% of sales. Assume that the Catskills dealer in Colorado Springs made sales totaling $450,000 during 2018. The company received cash for 10% of the sales and notes receivable for the remainder. Warranty payments totaled$12,000 during 2018. Requirements: 1. Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold. 2. Assume the Estimated Warranty Payable is $0 on January 1, 20182018. Post the 2018transactions to the Estimated Warranty Payable T-account. At the end of 2018,how much in Estimated Warranty Payable does the company owe?
4
4. Bonita.com sells 6800 units of its product for $460 each. The selling price includes a one- year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $40 per unit. In the year of sale, warranty contracts are honored on 120 units for a total cost of $4800. What amount should Bonita.com accrue on December 31 for estimated warranty costs? Select answer from the options below a. $8160 b. $32640 c. $ 4800 d. $3360
Creative Computing sells a laptop computer called the Creative Package to Professor Smith with an extended warranty for $780. The $780 price of a Creative Package includes the following: One laptop Computer A one year basic assurance warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to one year. An agreement that Professor Smith will pay an additional $75 to purchase an extended 1 year warranty. How many performance obligations are included in this sale of the Creative Package? Question 13 options: a) 1 b) 2 c) 3 d) 4
Vala