In 2010, Payton Corporation began selling a new line of products that carry a two-year warram the estimated warranty costs related to dollar sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2010 and 2011 are presented below: Sales 2010 300,000 2011 400,000 Actual Warranty Expenditures 2010 10,000 2011 20,000 What is the estimated warranty liability at the end of 2011? None of these O 29,000 19,000 O 8,000

In 2010, Payton Corporation began selling a new line of products that carry a two-year warram the estimated warranty costs related to dollar sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2010 and 2011 are presented below: Sales 2010 300,000 2011 400,000 Actual Warranty Expenditures 2010 10,000 2011 20,000 What is the estimated warranty liability at the end of 2011? None of these O 29,000 19,000 O 8,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A new product introduced by Reyes Promotions carries a two-year warranty against defects. The estimated warranty costs related to peso sales are as follows: Year of sale.. .3% Year after sale..... .5% Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021 are as follows: Sales 800,000 1,000,000 Expenditures 12,000 70,000 2020 2021 11. How much is the warranty expense in 2021? 12. How much is the estimated liability as of December 31, 2021? Assume the 2020 warranty did not yet expire.
During 2008, Luciana Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 3% within 12 months following sale and 5% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2007 and 2008 are as follows: Sales Actual expenditures 2007 40,000,000 1,000,000 2008 50,000,000 4,000,000 At December 31, 2008, Luciana would report estimated warranty liability of O None of these O 2,200,000 O 1,500,000 O 2,500,000
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?
During 2018, P started manufacturing and selling a new product with a three-year warranty. Based upon past experience with similar products, P estimated the following warranty costs as a % of sales dollars: First year of warranty 2.25% Second year of warranty 2.75% Third year of warranty 3.50% Sales and actual warranty expenditures for 2014 and 2015 were as follows: 2018 2019 Sales $940,000 $1,005,000 Actual warranty expenditures 12,900 47,100 Prepare the entry P made as of 12-31-18 to accrue for its estimated warranty liability. Prepare the entry P made during 2018 to account for actual warranty…
Blue Jay, Inc., manufactures and sells computer monitors with a three-year warranty.Warranty costs are expected to average 7% of sales during the warranty period. The followingtable shows the sales and actual warranty payments during the first two years of operations:Year Sales Warranty Payments2018 $650,000 $ 5,8502019 850,000 42,500Based on these facts, what amount of warranty liability should Blue Jay, Inc., report on itsbalance sheet at December 31, 2019?a. $48,350b. $56,650c. $105,000d. $42,500
10. During 2011, Rex Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales are P6,000,000for 2011 and P10,000,000 for 2012. Actual warranty expenditures are P90,000 for 2011 and P300,000 for 2012. On December 31, 2012, what is the estimated warranty liability? a. 570,000 b. 100,000 c. 450,000 d. 0
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2) Over the past 4 years, Matador has estimated warranty expense based on 3.5% of sales. On May 1, 2022, after reviewing its most recent year end number for actual warranties paid, it decided to change this estimate to 4.75%. If Matador had used the 4.75% in the past, warranty expenses would be $150,000 higher in prior years. During fiscal 2022, Matador had earned sales revenues of $2,750,000 of which 20% were cash sales and 80% were credit sales. The bookkeeper calculated warranty expenses for 2022 using the 3.5%. Round answer to nearest whole dollar. Determine the adjustment to ICO. Matador has a corporate tax rate of 30%.