Warranties Kim’s Athletics sells bicycles and other sports and athletic equipment. Sales and expected warranty claims for the year are as follows: Item Unit Sales Expected Warranty Claims for Warranty Period Cost per Claim Mountain bikes 625 5 claims per 100 sold $40 Racing bikes 150 1 claims per 15 sold 90 Snowboards 400 2 claim per 40 sold 35 Required: 1. Prepare the entry to record warranty expense for Kim's for the year. If an amount box does not require an entry, leave it blank. Dec. 31 - Select - - Select - - Select - - Select - (Record warranty expense) 2. Conceptual Connection: Why does Kim’s have to record a liability for future warranty claims? Warranties are . Therefore, companies must record and a corresponding if such contingent amounts are
Warranties Kim’s Athletics sells bicycles and other sports and athletic equipment. Sales and expected warranty claims for the year are as follows: Item Unit Sales Expected Warranty Claims for Warranty Period Cost per Claim Mountain bikes 625 5 claims per 100 sold $40 Racing bikes 150 1 claims per 15 sold 90 Snowboards 400 2 claim per 40 sold 35 Required: 1. Prepare the entry to record warranty expense for Kim's for the year. If an amount box does not require an entry, leave it blank. Dec. 31 - Select - - Select - - Select - - Select - (Record warranty expense) 2. Conceptual Connection: Why does Kim’s have to record a liability for future warranty claims? Warranties are . Therefore, companies must record and a corresponding if such contingent amounts are
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Warranties
Kim’s Athletics sells bicycles and other sports and athletic equipment. Sales and expected warranty claims for the year are as follows:
| Item | Unit Sales | Expected Warranty Claims for Warranty Period |
Cost per Claim | ||
| Mountain bikes | 625 | 5 claims per 100 sold | $40 | ||
| Racing bikes | 150 | 1 claims per 15 sold | 90 | ||
| Snowboards | 400 | 2 claim per 40 sold | 35 |
Required:
1. Prepare the entry to record warranty expense for Kim's for the year. If an amount box does not require an entry, leave it blank.
| Dec. 31 |
|
- Select - | - Select - |
|
|
- Select - | - Select - | |
| (Record warranty expense) |
2. Conceptual Connection: Why does Kim’s have to record a liability for future warranty claims?
Warranties are
. Therefore, companies must record
and a corresponding
if such contingent amounts are
.
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