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
expand_more
expand_more
format_list_bulleted
Textbook Question
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
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 - All of the following are reported as current...Ch. 8 - Prob. 2QCCh. 8 - Prob. 3QCCh. 8 - What is accounts payable turnover? a.Purchases on...Ch. 8 - Prob. 5QCCh. 8 - Nicholas Corporation accrues the interest expense...Ch. 8 - Phoebe Corporation signed a six-month note payable...Ch. 8 - Prob. 8QCCh. 8 - Backpack Co. was organized to sell a single...Ch. 8 - Prob. 10QC
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Hopewell sells a line of goods under a six-month warranty. Any defect arising during that period is repaired free of charge. Hopewell has calculated that if all the goods sold in the last six months of the year required repairs the cost would be $2 million. If all of these goods had more serious faults and had to be replaced the cost would be $6 million. The normal pattern is that 80% of goods sold will be fault-free, 15% will require repairs and 5% will have to be replaced. What is the amount of the provision required?arrow_forwardComputer Gian Manufacturing began operations in January 2008. Computer Giant manufactures and sells two different computer monitors. Monitor A, is a flat panel hi-definition monitor, which carries a two-year manufacturer's warranty against defects in workmanship. Computer Giant's management project that 8% of the monitors will require repair during the first year of the warranty while approximately 6% will require repair during the second year of the warranty. Monitor A sells for $400. The average cost to repair a monitor is $80. Monitor B is a regular LED monitor that retails for $150. Computer Giant has entered into an agreement with a local electronics firm who charges Computer Giant $20 per monitor sold and then covers all warranty costs related to this monitor. Sales and warranty information for 2008 is as follows: Sold 2,000 monitors (800 monitor A and 1,200 monitor B); all sales were on account. Actual warranty expenditures for monitor A were $4,000. Instructions: (a)…arrow_forward.Pirates PLC sells a line of goods under a six-month warranty. Any defect arising during that period is repaired free of charge. Pirates PLC has calculated that if all the goods sold in the last six months of the year required repairs the cost would be $2 million. If all of these goods had more serious faults and had to be replaced the cost would be $6 millionThe normal pattern is that 80% of goods sold will be fault-free, 15% will require repairs and 5% will have to be replaced. What is the amount of the provision required? Select one alternative: $1.6 million $6 million $2 million $0.6 millionarrow_forward
- Dunne Co. sells equipment service contracts that cover a twoyear period. The sales price of each contract is $600. Dunne's past experience is that, of the total dollars spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. Dunne sold 1,000 contracts evenly throughout the current year. In its December 31 balance sheet, what amount should Dunne report as deferred service contract revenue? Group of answer choices $540,000 $480,000 $360,000 $300,000arrow_forwardN Incorporated sells a single product for 50 per unit. All sales are on account, with 35% collected in the month of sale, another 30% the succeeding month and 33% more two months after the month of sale. The remaining balance is deemed uncollectible; thus, it is written off immediately after receiving the third installment. Estimated sales for first four months of 2021 were 20,000 units; 21,000 units; 22,500 units and 23,400 respectively. What is the balance of accounts receivable at the end of the first quarter?arrow_forwardAtlas Builders deals strictly with five customers. The average amounts these customers pay per month are $26,800, $32,900, $87,500, $211,800, and $462,500. The smaller two payments have a collection delay of three days while the others only have a one-day delay. Assume each month has 30 days. What is the amount of the average daily receipts? $27,383.33 $25,446.67 $29,833.3 $16,166.67 $16,866.67arrow_forward
- Publisher Co. delivers 1,000 books to Bookstore Co. under a consignment arrangement. The cost per book is P300. Publisher Co. pays freight of P22 per book. Bookstore Co. is entitled to a 20% commission based on the Publisher's suggested retail price. However, Bookstore Co, marks up the Publisher's suggested retail price anyway for another 15%. Six (6) months after the end of the semester, Bookstore Co. remits P245,700 to the Publisher for the sale of 700 books after deduction of 69,300 for the ff: 2% withholding tax based on the Publisher suggested price Bookstores commission Requirements Compute for the amounts to be presented in publisher statement of profit or loss. How much is the ending inventory to be presented in te publishers statement of financial position How much income is recognized by bookstorearrow_forwardPatty Corp., a public company, delivers 3,200 units to a customer on 1 April for $80/unit. Patty Corp. has a return policy where they allow any customer to return any unused product within 45 days and receive a full refund. The cost of each product is $64. Based on historical experience Patty estimates that customer will return 2% of the units sold. Patty expects to be able to resell any returned goods. Assume that 50 products are returned on 2 May. No additional units are returned by 15 May (the end of the return period). Required: Prepare the journal entries related to the sale of products. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 3 4 5 6 Prepare the journal entry required on 1 April to record the sale: Note: Enter debits before credits. Date 1 April General Journal Debit Creditarrow_forwardShaw company sells good that cost 600,000 to Charm company for 800,000 on January 2, 20x5. the sales price includes an installation fee, which is valued at 80,000. the fair value of the goods is 740,000. the installation is considered a separate performance obligation and is expected to take 6 months to complete. Prepare the journal entries to record the sale on January 2, 20x5. Shaw prepares income statement for the first quarter of 20x5, ending March 31, 20x5 (installation was completed on June 18, 20x5). How much revenue should Shaw recognize related to its sale to Charm?arrow_forward
- The problem is listed in the two images. Please helparrow_forwardAria Perfume, Inc., sold 3,210 boxes of white musk soap during January of 2021 at the price of $90 per box. The company offers a full refund to unsatisfied customers for any product returned within 30 days from the date of purchase. Based on historical experience, Aria expects that 3% of sales will be returned. How many performance obligations are there in each sale of a box of soap? How much revenue should Aria recognize in January?arrow_forwardA bank uses a certain form at a uniform rate of 60 pads per week during each of the 52 weeks per This year it is in operation. Every replenishment order it places is delivered at one time. No minimum inventory is carried. The cost of placing and receiving an order is $15. The purchase price is $ 2 per pad. The inventory carrying cost, in terms of an amount per pad per year, is estimated to be 25% of the unit purchase price of $2. The lead time is three weeks. A. Determine the value of the EOQB. With the use of the given data and the calculated value of the economic lot size, determine the following:1. Reorder point2. Maximum inventory3. Average inventory4. Average number of orders per week5. Average order cost per week6. Average carrying cost per week A bank uses a certain form at a uniform rate of 60 pads per week during each of the 52 weeks per This year it is in operation. Every replenishment order it places is delivered at one time. No minimum inventory is carried. The…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Revenue recognition explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=816Q6pOaGv4;License: Standard Youtube License