The Weeknd Co., a machinery dealer, sells a machine for P22,200 under a 1-year warranty contract that requires the company to replace all defective parts and to provide the necessary repair labor at no cost to the customers. With sales being made evenly throughout the year, The Weekend Co. sells for cash 600 machines in 2020 (half of the warranty expense is incurred in 2020, half in 2021). Based on experience, the 1-year warranty costs are estimated to be P510 parts and P660 labor. Assume that in 2020, these warranty costs are incurred exactly as estimated QUESTIONS: What amount of warranty expense would be charged against 2020 revenue? What amount of warranty liability would be appeared on the December 31,2020, statement of financial position
The Weeknd Co., a machinery dealer, sells a machine for P22,200 under a 1-year warranty contract that requires the company to replace all defective parts and to provide the necessary repair labor at no cost to the customers. With sales being made evenly throughout the year, The Weekend Co. sells for cash 600 machines in 2020 (half of the warranty expense is incurred in 2020, half in 2021). Based on experience, the 1-year warranty costs are estimated to be P510 parts and P660 labor. Assume that in 2020, these warranty costs are incurred exactly as estimated
QUESTIONS:
What amount of warranty expense would be charged against 2020 revenue?
What amount of warranty liability would be appeared on the December 31,2020,
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