Journal entries in the Ledger: The business runs with the transactions it makes. Every transaction results in some outcome like the creation of asset, liability, income, loss, gain or expense. The transactions are recorded on the basis of the resulted outcome. The debits and the credits are made on the basis of the rules of the accounting. Warranty Expense and Estimated Warranty Payable: Warranty Expense refers to the cost which a business expects to incur or has already incurred for the repair or replacement of the goods sold. Warranty Expense is calculated by using the following formula – W a r r a n t y E x p e n s e = S a l e s X E s t i m a t e d w a r r a n t y p a y a b l e ( r a t e o f s a l e s ) Requirement 1 To prepare: Journal entries of the given transactions in Percy Bowes’s general journal.

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Answer 1

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem P11.33BPGB

To determine

Concept Introduction:

Journal entries in the Ledger:

The business runs with the transactions it makes. Every transaction results in some outcome like the creation of asset, liability, income, loss, gain or expense. The transactions are recorded on the basis of the resulted outcome. The debits and the credits are made on the basis of the rules of the accounting.

Warranty Expense and Estimated Warranty Payable:

Warranty Expense refers to the cost which a business expects to incur or has already incurred for the repair or replacement of the goods sold.

Warranty Expense is calculated by using the following formula –

$W a r r a n t y E x p e n s e = S a l e s X E s t i m a t e d w a r r a n t y p a y a b l e (r a t e o f s a l e s)$

Requirement 1

To prepare:

Journal entries of the given transactions in Percy Bowes’s general journal.

To determine

Requirement 2

The balance of estimated warranty payable on December 31, 2016.

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Answer 2

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem P11.33BPGB

To determine

Concept Introduction:

Journal entries in the Ledger:

The business runs with the transactions it makes. Every transaction results in some outcome like the creation of asset, liability, income, loss, gain or expense. The transactions are recorded on the basis of the resulted outcome. The debits and the credits are made on the basis of the rules of the accounting.

Warranty Expense and Estimated Warranty Payable:

Warranty Expense refers to the cost which a business expects to incur or has already incurred for the repair or replacement of the goods sold.

Warranty Expense is calculated by using the following formula –

$W a r r a n t y E x p e n s e = S a l e s X E s t i m a t e d w a r r a n t y p a y a b l e (r a t e o f s a l e s)$

Requirement 1

To prepare:

Journal entries of the given transactions in Percy Bowes’s general journal.

To determine

Requirement 2

The balance of estimated warranty payable on December 31, 2016.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem P11.33BPGB

To determine

Concept Introduction:

Journal entries in the Ledger:

The business runs with the transactions it makes. Every transaction results in some outcome like the creation of asset, liability, income, loss, gain or expense. The transactions are recorded on the basis of the resulted outcome. The debits and the credits are made on the basis of the rules of the accounting.

Warranty Expense and Estimated Warranty Payable:

Warranty Expense refers to the cost which a business expects to incur or has already incurred for the repair or replacement of the goods sold.

Warranty Expense is calculated by using the following formula –

$W a r r a n t y E x p e n s e = S a l e s X E s t i m a t e d w a r r a n t y p a y a b l e (r a t e o f s a l e s)$

Requirement 1

To prepare:

Journal entries of the given transactions in Percy Bowes’s general journal.

To determine

Requirement 2

The balance of estimated warranty payable on December 31, 2016.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem P11.33BPGB

To determine