The selling price of Maning-Mani Appliances Company's unit is Php10,000 each. The buyers are provided with a 2-year warranty that is expected to cost the company Php1,000 per unit in the year of sale and Php2,000 per unit in the year following the sale The company sold 400 units in 2021 and 250 units in 2022. Based on company estimates, 20% of the units sold are repaired in the first year and 40% in the second year. Payments for warranty repairs were Php220,000 and Php300,000 in 2021 and 2022, respectively.
The selling price of Maning-Mani Appliances Company's unit is Php10,000 each. The buyers are provided with a 2-year warranty that is expected to cost the company Php1,000 per unit in the year of sale and Php2,000 per unit in the year following the sale The company sold 400 units in 2021 and 250 units in 2022. Based on company estimates, 20% of the units sold are repaired in the first year and 40% in the second year. Payments for warranty repairs were Php220,000 and Php300,000 in 2021 and 2022, respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
What amount should be reported as the warranty liability for 2021 and 2022, respectively?*
a. 20,000 and 170,000
b. 170,000 and 650,000
c. 500,000 and 650,000
d. 500,000 and 170,000
Transcribed Image Text:The selling price of Maning-Mani Appliances Company's unit is
Php10,000 each. The buyers are provided with a 2-year warranty
that is expected to cost the company Php1,000 per unit in the
year of sale and Php2,000 per unit in the year following the sale
The company sold 400 units in 2021 and 250 units in 2022.
Based on company estimates, 20% of the units sold are repaired
in the first year and 40% in the second year. Payments for warranty
repairs were Php220,000 and Php300,000 in 2021 and 2022,
respectively.
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