Answered: warranty

Business

Accounting

warranty

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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Charm Company sells 1,000 units of radio sets at P9,000 each for cash. Each radio set is under warranty for one year and the company has estimated from past experience that warranty cost will probably average P500 per unit and that only 60% of the units sold will be returned for repairs. During the year, actual payment incurred for repairs is P180,000. What amount would be recorded as estimated warranty liability at the end of the year? 300,000 480,000 180,000 120,000
Keaton Inc. sells stability balls for $30/each. Each ball comes with a two year warranty. Keaton accrues warranty expense at a rate of 1.5% of sales dollars. Their cost to replace damaged and defective stability balls under warranty is $7 per ball. In June 2023, Keaton sold 1,000 stability balls. What is the dollar value of Keaton's June sales? How much should cooper record was Warranty Expense for June? Prepare the journal entry to record June's Warranty Expense. DR: CR: In the month of August, 2023, 25 balls were returned under the warranty. Prepare the journal entry to record the replacement of the returned balls. DR: CR:
Excom sells radios, and each unit carries a two-year replacement warranty. The cost repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 100 radios for $50 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense? a. $50 b. $250 c. $30 d. $120 e. None of the above.
Concord Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-2% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warranty expenditures for the first three years of business were: Sales Warranty Expenditures 2021 $750,000 $ 15,900 2022 1,010,000 46, 000 2023 1,017, 000 80,000 (a) Calculate the amount that Concord should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 SFP using the assurance - type warranty (expense - based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to the rates above. Warranty expense Warranty liability
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Excom sells radios and each unit carries a two-year replacement warranty. The cost of repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 110 radios for $40 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense? Оа. S40 Оb. $21 Oc. $220 Od. $2,310 Previous
Grouper Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-3% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warranty expenditures for the first three years of business were: Sales Warranty Expenditures 2021 $870,000 $17,100 2022 1,010,000 48,400 2023 1,041,000 80,000 (a) Calculate the amount that Grouper should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 SFP using the assurance-type warranty (expense-based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to the rates above. Warranty expense $ Warranty liability $
Aviation Systems sells its products with a three-year manufacturing warranty. The company's sales revenue is $600,000. Based on prior experience, the company estimates that warranty costs are 5% of sales revenue. Actual warranty costs related to these sales were $5,000 during the year. How much is the estimated warranty liability reported in the balance sheet this year? Multiple Choice $25,000. $30,000. $10,000. $5,000, >
Osman Corp. sells Product CC15 for $126.00 each. Each unit is covered by a three year warranty, and Osman estimates that the average cost of warranty repairs and replacements is $11.26 per unit over the term of the warranty. Osman reports the following data for its first three years of operations: Units sold Actual warranty costs 2023 11,000 $36,000 2024 22,000 $122,000 2025 35,000 $217,000 What is Osman's warranty liability at December 31, 2024?
A new product introduced by Reyes Promotions carries a two-year warranty against defects. The estimated warranty costs related to peso sales are as follows: Year of sale.. .3% Year after sale..... .5% Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021 are as follows: Sales 800,000 1,000,000 Expenditures 12,000 70,000 2020 2021 11. How much is the warranty expense in 2021? 12. How much is the estimated liability as of December 31, 2021? Assume the 2020 warranty did not yet expire.
Rotary Tools sells power tools and backs each product it sells with a one-year warranty against defects. Based on previous experience, the company expects warranty costs to be approximately 6% of sales. By the end of the first year, sales are $700,000. Actual warranty expenses incurred so far are $12,000.1. Does this situation represent a contingent liability? Yes No 2. & 3. Record the appropriate journal entries for the warranties. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Record warranty expense and warranty liability for the year based on 6% of sales. Transaction General Journal Debit Credit 1 Record the actual warranty expenditures of $12,000 incurred so far. Transaction General Journal Debit Credit 2 4. What is the…
4. Bonita.com sells 6800 units of its product for $460 each. The selling price includes a one- year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $40 per unit. In the year of sale, warranty contracts are honored on 120 units for a total cost of $4800. What amount should Bonita.com accrue on December 31 for estimated warranty costs? Select answer from the options below a. $8160 b. $32640 c. $ 4800 d. $3360