Veneer Company started selling a new product that carried a two-year warranty against defect. Based upon past experience with other products, the estimated warranty costs related to peso sales are computed as follows: first year of warranty 3% second year of warranty 5% Total sales and actual warranty repairs for 2019 and 2020 are given below: 2019 2020 Sales P420,000 P696,000 Actual warranty expenditures 14,880 18,000 What amount should Veneer report as its estimated warranty liability as of December 31, 2020? Prepare all entries related to the above transactions of Veneer Company.
Veneer Company started selling a new product that carried a two-year warranty against defect. Based upon past experience with other products, the estimated warranty costs related to peso sales are computed as follows: first year of warranty 3% second year of warranty 5% Total sales and actual warranty repairs for 2019 and 2020 are given below: 2019 2020 Sales P420,000 P696,000 Actual warranty expenditures 14,880 18,000 What amount should Veneer report as its estimated warranty liability as of December 31, 2020? Prepare all entries related to the above transactions of Veneer Company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Veneer Company started selling a new product that carried a two-year warranty against defect. Based upon past
experience with other products, the estimated warranty costs related to peso sales are computed as follows:
first year of warranty 3%
second year of warranty 5%
Total sales and actual warranty repairs for 2019 and 2020 are given below:
2019 2020
Sales P420,000 P696,000
Actual warranty expenditures 14,880 18,000
What amount should Veneer report as its estimated warranty liability as of December 31, 2020?
Prepare all entries related to the above transactions of Veneer Company.
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