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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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1. What amount of warranty expense should be shown on Crassula's income statement for the year ended December 31, 2021?
2. What amount of warranty liability should be shown on Crassula's

Transcribed Image Text:Problem 5. Crassula Company in June 2021 began producing and selling a new line
of washing machine. By the end of the year, it had sold 120,000 units to various
dealers for P15,000 each. The product was sold under a 1-year warranty and the
company estimates warranty costs to be P750 per washing machine. Crassula had
paid out P30million in warranty expenses as of Dec 31, 2021, which is also the
amount shown as warranty expense in its income statement for the current year.
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