Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
2nd Edition
ISBN: 9781337912259
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 9, Problem 10MC
To determine
Calculate the amount that should be reported as a liability by Company L as at December 31, 2018.
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During 2019, Lawton Company introduced a new line of machines that carry a 3-year assurance-type warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale,and 6% in the second year after sale.
Sales and actual warranty expenditures for the first 3-year period were as follows:
What amount should Lawton report as a liability at December 31, 2021?a. $0b. $21,000c. $84,000d. $105,000
During 2021, JJJ Co. introduced a new line of machines that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows:Sales / Actual Warranty / Expenditures2021 / 600,000 / 9,0002022 / 1,500,000 / 65,0002023 / 2,100,000 / 135,000What amount should JJJ report as a liability at December 31, 2023?
During 2018, Stable Company introduced a new line of product that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows:
Sales
Actual Warranty Expenditures
2018
P 400,000
P 6,000
2019
1,000,000
40,000
2020
1,400,000
90,000
P2,800,000
P136,000
What amount should Stable report as estimated warranty liability at December 31, 2020?
What amount of warranty expense should be reported for 2019?
Chapter 9 Solutions
Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
Ch. 9 - Prob. 1GICh. 9 - Prob. 2GICh. 9 - List the three characteristics of a liability....Ch. 9 - Prob. 4GICh. 9 - Prob. 5GICh. 9 - Prob. 6GICh. 9 - Prob. 7GICh. 9 - Prob. 8GICh. 9 - How does materiality affect the accounting for...Ch. 9 - Distinguish between an interest-bearing note and a...
Ch. 9 - Prob. 11GICh. 9 - How should long-term debt that is callable by a...Ch. 9 - Prob. 13GICh. 9 - Prob. 14GICh. 9 - Prob. 15GICh. 9 - Prob. 16GICh. 9 - Prob. 17GICh. 9 - Prob. 18GICh. 9 - Prob. 19GICh. 9 - Prob. 20GICh. 9 - Prob. 21GICh. 9 - Prob. 22GICh. 9 - Prob. 23GICh. 9 - Prob. 24GICh. 9 - Prob. 25GICh. 9 - Prob. 26GICh. 9 - Prob. 27GICh. 9 - Prob. 28GICh. 9 - Prob. 1MCCh. 9 - Prob. 2MCCh. 9 - When a company receives a deposit from a customer...Ch. 9 - Prob. 4MCCh. 9 - Prob. 5MCCh. 9 - Prob. 6MCCh. 9 - Prob. 7MCCh. 9 - Prob. 8MCCh. 9 - Prob. 9MCCh. 9 - Prob. 10MCCh. 9 - Rescue Sequences LLC purchased inventory by...Ch. 9 - Use the same information in RE9-1 except that the...Ch. 9 - Cee Co.s fiscal year begins April 1. At the...Ch. 9 - Prob. 4RECh. 9 - Prob. 5RECh. 9 - Smith Company is required to charge customers an...Ch. 9 - Wallace Corporation summarizes the following...Ch. 9 - Prob. 8RECh. 9 - Prob. 9RECh. 9 - Prob. 10RECh. 9 - After years of experience, Dilcort Company...Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Refundable Deposits Party Warehouse Inc. rents a...Ch. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Prob. 21ECh. 9 - Prob. 22ECh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Prob. 9PCh. 9 - Prob. 10PCh. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Prob. 13PCh. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 1CCh. 9 - Prob. 2CCh. 9 - Prob. 3CCh. 9 - Prob. 4CCh. 9 - Various Contingency Issues Skinner Company has the...Ch. 9 - Prob. 6CCh. 9 - Prob. 7CCh. 9 - Prob. 8CCh. 9 - Prob. 10C
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- In 2024, Carla Vista Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of the sale, 3% in the year after the sale, and 4% in the second year after the sale. Sales revenue and actual warranty expenditures for the first three year period were as follows: (assume the accrual method) Sales Revenue Actual Warranty Expenditures 2024 $1598000 $41000 2025 2496000 66000 2026 2107000 136000 $6201000 $243000 What amount should Carla Vista report as a liability under the warranty at December 31, 2026? $84280 $72080 $315090 0 $0arrow_forwardDuring 2019, Bonita Industries introduced a new line of machines that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 1% of sales in the year of sale, 2% in the year after sale, and 3% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2019 $ 1394000 $ 24000 2020 997000 38000 2021 1394000 90000 $ 3785000 $ 152000 What amount should Bonita report as a liability at December 31, 2021? $ 35820 $0 $ 75100 $ 13940arrow_forwardDuring 2016, Namnama Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 4% within 12 months following sale and 6% in the second 12 months following sale. The entity reported sales of P5,000,000 for 2016 and P6,000,000 for 2017. The actual expenditures incurred amounted to P150,000 for 2016 and P550,000 for 2017. 1. What is the warranty expense for 2016? a. 500,000 b. 200,000 c. 250,000 d. 300,000 2. What is the estimated warranty liability on December 31, 2016? a. 350,000 b. 150,000 c. 100,000 d. 50,000 3. What is the warranty expense for 2017? a. 650,000 b. 600,000 c. 500,000 d. 550,000 4. What is the estimated warranty liability on December 31, 2017? a. 360,000 b. 400,000 c. 240,000 d. 100,000arrow_forward
- Das Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 2% of sales. Sales were $21 million and actual warranty expenditures were $31,750 for the first year of selling the product. Complete the following T-account to determine the amount (if any) Das should report as a liability at the end of the year. Note: Enter your answers in whole dollars. Beginning Balance Ending Balance Debit Warranty Liability Creditarrow_forwardDas Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1% of sales. Sales were $14 million and actual warranty expenditures were $26,500 for the first year of selling the product. Complete the following T-account to determine the amount (if any) Das should report as a liability at the end of the year. Note: Enter your answers in whole dollars.arrow_forwardOn January 1,2019, ABC Company introduced a new line of product that carries a 3 year warranty against factory defects. The product warranties provide assurance that the new line of product will function as intended based on agreed-upon specifications.Estimated warranty costs related to peso sales are as follows: 2% of sales in the year of sale, 4% of sales in the year after sale, and 6% of sales in the second year after sale.Sales and warranty expenditures for the period 2019 to 2021 were as follows: Sales Actual warranty expenditures2019 P 5,000,000 P 100,0002020 7,500,00 150,0002021 10,000,000 200,000The company's reporting period is a calendar year.How much is the warranty expense for the year 2020?arrow_forward
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