Financial Accounting (12th Edition) (What's New in Accounting)
Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter 8, Problem 9QC

Backpack Co. was organized to sell a single product that carries a 45-day warranty against defects. Engineering estimates indicate that 2% of the units sold will prove defective and require an average repair cost of $60 per unit. During Backpack’s first month of operations, total sales were 900 units: by the end of the month, five defective units had been repaired. The liability for product warranties at month-end should be

  a.    $1,380.

  b.    $300.

  c.    $1,080.

  d.    $780.

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Backpack Co. was organized to sell a single product that carries a 45-day warranty againstdefects. Engineering estimates indicate that 2% of the units sold will prove defective andrequire an average repair cost of $60 per unit. During Backpack’s first month of operations,total sales were 900 units; by the end of the month, five defective units had been repaired.The liability for product warranties at month-end should bea. $1,380.b. $300.c. $1,080.d. $780.
Video-Technical, Inc. was organized to sell a single product for $600 per unit, including a 60-day warranty against defects.  Engineering estimates indicate that 5% of the units sold will prove defective and require an average repair cost of $50 per unit.  During September, total sales were $198,000; 9 units sold during September were found defective and repaired. The accrued liability for product warranties at month-end should be:   Select one: a. $   850 b. $   400 c. $   450 d. $1,150 e. None of the above
The goal of Video-Technical, Inc.'s formation was to offer a single product for $600 each with a 60-day warranty against flaws. According to engineering estimations, 5% of the units that are sold will turn out to be faulty and need an average $50 in repairs. $198,000 in sales were made overall in September, although 9 of the devices were later determined to be faulty and had to be fixed. At the conclusion of the month, the accumulated obligation for product guarantees should be: A. $ 850 B. $ 400 C. $ 450 D. $1,150 E. None of the above

Chapter 8 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 8 - Potential liabilities that depend on future events...Ch. 8 - A contingent liability should be recorded in the...Ch. 8 - Prob. 8.1ECCh. 8 - Prob. 8.1SCh. 8 - Prob. 8.2SCh. 8 - Prob. 8.3SCh. 8 - Prob. 8.4SCh. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.6SCh. 8 - (Learning Objective 4: Report warranties in the...Ch. 8 - (Learning Objective 4: Account for accrued...Ch. 8 - (Learning Objective 5: Interpret a companys...Ch. 8 - Prob. 8.10AECh. 8 - Prob. 8.11AECh. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - (Learning Objective 3: Record note payable...Ch. 8 - (Learning Objective 3: Account for a short-term...Ch. 8 - Prob. 8.15AECh. 8 - Prob. 8.16AECh. 8 - Prob. 8.17AECh. 8 - Prob. 8.18AECh. 8 - Prob. 8.19AECh. 8 - Prob. 8.20BECh. 8 - Prob. 8.21BECh. 8 - LO 3 (Learning Objective 3: Purchase inventory,...Ch. 8 - Prob. 8.23BECh. 8 - Prob. 8.24BECh. 8 - Prob. 8.25BECh. 8 - Prob. 8.26BECh. 8 - Prob. 8.27BECh. 8 - (Learning Objectives 1, 2, 3, 4: Report current...Ch. 8 - Prob. 8.29BECh. 8 - Prob. 8.30QCh. 8 - For the purpose of classifying liabilities as...Ch. 8 - Prob. 8.32QCh. 8 - Prob. 8.33QCh. 8 - Prob. 8.34QCh. 8 - Prob. 8.35QCh. 8 - Prob. 8.36QCh. 8 - Prob. 8.37QCh. 8 - Prob. 8.38QCh. 8 - Prob. 8.39QCh. 8 - Prob. 8.40QCh. 8 - Prob. 8.41QCh. 8 - Prob. 8.42QCh. 8 - Prob. 8.43QCh. 8 - Group A LO 1, 2, 3, 4 (Learning Objective 1, 2, 3,...Ch. 8 - Prob. 8.45APCh. 8 - LO 1, 2, 3, 4 (Learning Objectives 1, 2, 3, 4:...Ch. 8 - LO 4, 5 (Learning Objectives 4, 5: Account for...Ch. 8 - Group B LO 1, 2, 3, 4 (Learning Objectives 1, 2,...Ch. 8 - Prob. 8.49BPCh. 8 - Prob. 8.50BPCh. 8 - Prob. 8.51BPCh. 8 - Prob. 8.52CEPCh. 8 - Prob. 8.53SCCh. 8 - Prob. 8.54DCCh. 8 - Prob. 8.55DCCh. 8 - Prob. 8.56EICCh. 8 - Prob. 1FFCh. 8 - Prob. 1GP
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