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 Number of sets sold 300 500 Total payments for warranty repairs 40,000 150,000

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 Number of sets sold 300 500 Total payments for warranty repairs 40,000 150,000

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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Question

4. Analyze the estimated warranty 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
Number of sets sold
300
500
Total payments for warranty
repairs
40,000
150,000

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