Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 10, Problem 10.20EX
a)
To determine
Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.
To state: The reason to separately disclose the short and long-term estimated warranty liabilities.
b)
To determine
To Journalize: Year 2 product warranty expense
c)
To determine
To state: Two conditions that must be met in order for a product warranty liability to be reported in the financial statement.
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Accrued Product Warranty
General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows:
(in millions)
Year 2
Year 1
Current estimated product warranty payable
$3,059
$2,884
Noncurrent estimated product warranty payable
4,327
4,147
Total
$7,386
$7,031
Presume that GM's sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million.
a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash demands on the business relative to the quick current assets and other longer-term demands .
Feedback
Review the need for a classified balance sheet.
b. Provide the journal entry for the Year 2 product warranty expense.
Product Warranty Expense
Product Warranty Payable
.
Accrued Product Warranty
Lachgar Industries disclosed estimated product warranty payable for comparative years as follows:
(in millions)
Current estimated product warranty payable
Noncurrent estimated product warranty payable
Year 2
$16,211
9,860
$26,071
Year 1
$15,542
8,690
$24,232
Total
Presume that Lachgar's sales were $211,240 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $16,712
million.
a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash
on the business relative to the quick current assets and other longer-term
b. Provide the journal entry for the Year 2 product warranty expense.
c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?
Chapter 10 Solutions
Financial & Managerial Accounting
Ch. 10 - Does a discounted note payable provide credit...Ch. 10 - Employees are subject to taxes withheld from their...Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - To match revenues and expenses properly, should...Ch. 10 - Prob. 8DQCh. 10 - When should the liability associated with a...Ch. 10 - Prob. 10DQ
Ch. 10 - Proceeds from notes payable On October 12,...Ch. 10 - Proceeds from notes payable On January 26, Nyree...Ch. 10 - Prob. 10.2APECh. 10 - Prob. 10.2BPECh. 10 - Prob. 10.3APECh. 10 - Prob. 10.3BPECh. 10 - Prob. 10.4APECh. 10 - Prob. 10.4BPECh. 10 - Prob. 10.5APECh. 10 - Prob. 10.5BPECh. 10 - Prob. 10.6APECh. 10 - Prob. 10.6BPECh. 10 - Prob. 10.7APECh. 10 - Prob. 10.7BPECh. 10 - Quick ratio Nabors Company reported the following...Ch. 10 - Quick ratio Adieu Company reported the following...Ch. 10 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 10 - Entries for discounting notes payable Griffin...Ch. 10 - Evaluating alternative notes A borrower has two...Ch. 10 - Entries for notes payable A business issued a...Ch. 10 - Entries for discounted note payable A business...Ch. 10 - Prob. 10.6EXCh. 10 - Prob. 10.7EXCh. 10 - Calculate payroll An employee earns 32 per hour...Ch. 10 - Prob. 10.9EXCh. 10 - Prob. 10.10EXCh. 10 - Payroll tax entries According to a summary of the...Ch. 10 - Prob. 10.12EXCh. 10 - Prob. 10.13EXCh. 10 - Prob. 10.14EXCh. 10 - Prob. 10.15EXCh. 10 - Accrued vacation pay A business provides its...Ch. 10 - Pension plan entries Yuri Co. operates a chain of...Ch. 10 - Prob. 10.18EXCh. 10 - Accrued product warranty Lowe Manufacturing Co....Ch. 10 - Prob. 10.20EXCh. 10 - Prob. 10.21EXCh. 10 - Quick ratio Gmeiner Co. had the following current...Ch. 10 - Prob. 10.23EXCh. 10 - Liability transactions The following items were...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Wage and tax statement data on employer FICA tax...Ch. 10 - Payroll register The following data for Throwback...Ch. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 10.1BPRCh. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Prob. 10.3BPRCh. 10 - Prob. 10.4BPRCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 1CPPCh. 10 - Ethics and professional conduct in business Tonya...Ch. 10 - Prob. 10.2CPCh. 10 - Prob. 10.3CPCh. 10 - Prob. 10.5CP
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