The journal for recording warranty for two years on cash basis. Given information: Company’s sales amounted to $10,000,000. Cost of providing warranty is 4% of sales. Duration of providing warranty is 2 years. Repair cost for first year is 218,000 including $150,000 for parts and $68,000 for labor. Repair cost for second year is $230,000 including $148,000 for parts and $82,000 for labor.

Question

Want to see the full answer?

Answer 1

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 13, Problem 13.10E

a.

To determine

To prepare: The journal for recording warranty for two years on cash basis.

Given information:

Company’s sales amounted to $10,000,000.

Cost of providing warranty is 4% of sales.

Duration of providing warranty is 2 years.

Repair cost for first year is 218,000 including $150,000 for parts and $68,000 for labor.

Repair cost for second year is $230,000 including $148,000 for parts and $82,000 for labor.

b.

To determine

To prepare: The journal for recording warranty for two years on accrual basis.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

When iuploading image then it get blurry Comment in comment section I will write data.

Correct answer please

In 2022, North Shore Community College had a total student body that was 5% more than in 2021, which was 5% more than in 2020. The enrollment in 2022 was 4,200. How many students attended the college in 2021? How many students attended the college in 2020?

Answer 2

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 13, Problem 13.10E

a.

To determine

To prepare: The journal for recording warranty for two years on cash basis.

Given information:

Company’s sales amounted to $10,000,000.

Cost of providing warranty is 4% of sales.

Duration of providing warranty is 2 years.

Repair cost for first year is 218,000 including $150,000 for parts and $68,000 for labor.

Repair cost for second year is $230,000 including $148,000 for parts and $82,000 for labor.

b.

To determine

To prepare: The journal for recording warranty for two years on accrual basis.

Expert Solution & Answer

Want to see the full answer?

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 13, Problem 13.10E

a.

To determine

To prepare: The journal for recording warranty for two years on cash basis.

Given information:

Company’s sales amounted to $10,000,000.

Cost of providing warranty is 4% of sales.

Duration of providing warranty is 2 years.

Repair cost for first year is 218,000 including $150,000 for parts and $68,000 for labor.

Repair cost for second year is $230,000 including $148,000 for parts and $82,000 for labor.

b.

To determine

To prepare: The journal for recording warranty for two years on accrual basis.

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 13, Problem 13.10E

a.

To determine