During 2020, the Thomas Company began selling a new type of machine that carries a two-year assurance-type warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $1,000 per machine sold. During 2020, sales and actual warranty expenditures were $5,000,000 (100 machines) and $44,000, respectively. Thomas uses the GAAP approach of accruing warranty expense (and the related liability) in the year of the sale.
Q: Lindy Appliance begins operations in 2021 and offers a one-year warranty on all products sold. Total…
A: Warranty refers to a promise or guarantee given by the seller or manufacturer of a product to its…
Q: 1)Suppose the company in the previous question offers a two-year extended warranty, which it sells,…
A: Given:Company offers two year extension warrantyExtended warranty sales total=$20000During 2020 the…
Q: During 2022, ABC Company introduced a new product carrying a two-year warranty against defects. The…
A: Warranty Liability: When a firm incurs warranty liabilities, it records the amount of repair or…
Q: Vera., a dealer of household appliances, sells washing machines at an average price of P8,100. The…
A: Warranty Liability: The expected cost of repair and maintenance of the sold items should be recorded…
Q: t the beginning of 2021, Angel Corporation began offering a 1-year warranty on its products. The…
A: Solution: Warranty expense is recognized in income statement in the year of sale based on estimate…
Q: Culver Company sells a machine for $7,700 with a 12-onth warranty agreement that requires the…
A: Warranty is a form of assurance being provided by seller to the buyer that in case product will have…
Q: Pronghorn Corp. provides at no extra charge a two-year warranty with one of its products, which was…
A: Some of the companies selling product also offer a warranty with it. Warranty expenses refers to the…
Q: Das Medical introduced a new implant that carries a five- year warranty against manufacturer's…
A: A warranty is a type of guarantee that a manufacturer makes regarding the condition of its product.…
Q: In 2020, Carpenter Inc. sells a product that carries a separate, three-year warranty for parts and…
A: The expense that a company plans or already expended for the repair and replacement of items that…
Q: Prepare 2020 entries for Martinez assuming that the warranties are not an integral part of the sale…
A: Cash received = 500×5900 =$2950,000
Q: In 2020, Eastern Appliance Manufacturing introduced a fully automatic washing machine with dryer.…
A: Warranty means where the company is undertaking to make good the loss which has been incurred due to…
Q: In 2023, Quapau Products introduced a new line of hot water heaters that carry a one-year warranty…
A: Note: Even though in 2023 the actual warranty costs are stood at 3% we are considering industry…
Q: Windsor Company sold 420 copy-making machines in 2020 for $2,900 apiece for cash, together with a…
A: The journal entries are prepared to keep the record of day to day transactions of the business on…
Q: Cullumber Ltd. sells computers, computer accessories, and software. On its computer sales, the…
A: The objective of the question is to prepare journal entries to record the warranty transactions for…
Q: Norse LLC, an accrual basis computer manufacturer, began offer a two-year warranty on their…
A: The cost that a company estimates it will incur for the replacement or repair of products that their…
Q: In 2023, Ayayai Corp. began selling a new line of products that carry a two-year warranty against…
A: The warranty expense is estimated on the basis of past year experiences. The warranty expense is…
Q: A corporations sells computers under a 2 year warranty contract that requires the corporation to…
A: Given that: Sale of 375 computers at a unit price of $2300
Q: During 2024, Foxfire Company introduced a new line of machines that carry a three-year warranty…
A: Warranty is a form of assurance being given by seller to the buyer that in case there is any defect…
Q: Early in 2020, Kingbird Equipment Company sold 600 Rollomatics at $5,400 each. During 2020, Kingbird…
A: An assurance-type warranty guarantees that the product will function as intended. This type of…
Q: Hunter Appliances sells refrigerators for $1,500, which includes a two-year warranty that requires…
A: The first, systematic recording of all monetary business transactions is called a journal entry.…
Q: In 2020, Quapau Products introduced a new line of hot water heaters that carry a one-year warranty…
A: Given information is: In 2020, Quapau Products introduced a new line of hot water heaters that carry…
Q: The Richards Company paid for a five-year extended warranty on all of their equipment on March 1,…
A: If any warranty charges has been paid in advance , we need to write that expenditure in proportion…
Q: Prepare the journal entry to record this transaction on January 2, 2025, and on December 31, 2025…
A: The warranty expense is the expense which is used by the company and the expense which is associated…
Q: On January 2, 2020, Monty Company sells production equipment to Fargo Inc. for $47,000. Monty…
A:
Q: Flint Corporation sells DVD players. The corporation also offers its customers a 4-year warranty…
A: Journal entries are the primary reporting of the business transactions in the books of accounts.…
Q: The following situations relate to Bolivia Company. 1. Bolivia provides a warranty with all its…
A: Step 1 The warranty expense is $5,000,000. It is obtained by adding the product of the number of…
Q: On January 1, 2021, Enzo S.r.l. sold and delivered a car to a customer for $80,000 cash. The car…
A: Warranty - a type of written guarantee given to the buyer of the asset or goods by the seller with a…
Q: Nash Company sells a machine for $7,300 with a 12-month warranty agreement that requires the company…
A: Sales revenue= $7,300×480= $3,504,000 Warranty expense= (480×$338)/2= 162,240/2= $81,120 Inventory=…
Q: .Show all entries are required concerning warranties for 2020 and the computations that justify the…
A: Journal entry: Journal entry is the book of original entry where first transactions are recorded in…
Q: Items 14 and 15 are based on the following information
A: In order to gain the custome confidence for the product , companies offer warranty.…
Q: Raya Company offers a 3-year warranty on its products. Raya estimated warranty costs to be 5% of…
A: The warranty Expenses are estimated on the basis of sales revenue earned during the period.
Q: On December 31, 2025, Pharoah Company sells production equipment to Steering Inc. for $69,000.…
A: A warranty expense is a cost that a business expects to incur as a result of providing its customers…
Q: Landfall Navigation began operations in 2024 and provides a one-year warranty on the products it…
A: The correct answer is:b. warranty expense of $160,000 for 2024.Here's why:Warranty Obligation: Since…
Q: Nov. Dec. Jan. 2020 15 Sold 4,000 scanners for $216,000 cash. 30 Recognized warranty expense for…
A: Calculation of warranty expenses and warranty liability balance are as follows
Q: 2020, Quapau Products introduced a new line of hot water heaters that carry a one-year warranty…
A: Warranty expenses are anticipated costs of a company expects to incur for repairing or replacing…
Q: On January 2, 2025, Sunland Company sells production equipment to Bramble Inc. for $54,000. Sunland…
A: Step 1:Preparation of journal entries. DateAccount Titles and ExplanationDebitCreditJan 2,…
Q: In 2023, Quapau Products introduced a new line of hot water heaters that carry a one-year warranty…
A: Part 1: Answer:The 2024 warranty expense is $14,000.Explanation:Part 2: Explanation:Step 1:…
Q: 4. Two good governance practices for ensuring government accountability to the people are A…
A: A general report refers to the presentation of a complete picture of the financial statements of the…
Q: During 2019, Angel Co. introduced a new line of appliances that carry a three-year warranty against…
A: Answer - A warranty liability is a liability account in which a company records the amount of the…
Q: Al Jabel Corporation sells WIFI speakers and offers 2-year warranty contract to customers. During…
A: Introduction: Journal: Recording of a business transactions in a chronological order. First step in…
Q: Al Jabel Corporation sells WIFI speakers and offers 2-year warranty contract to customers. During…
A: A journal entry is used to record a business transaction in a company's accounting records. A…
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- Woodmier Lawn Products introduced a new line of commercial sprinklers in 2023 that carry a one-year warranty against manufacturer's defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experience of others in the industry. Based on that experience, warranty costs were expected to approximate 2% of sales. Sales of the sprinklers in 2023 were $2.5 million. Accordingly, the following entries relating to the contingency for warranty costs were recorded during the first year of selling the product: Debit Credit General Journal Accrued liability and expense Warranty expense (2% x $2,500,000) 50,000 Warranty liability Actual expenditures (summary entry) Warranty liability Cash In late 2024, the company's claims experience was evaluated and it was determined that claims were far more than expected-3% of sales rather than 2%. 50,000 23,000 23,000 Required: 1. Assuming sales of the sprinklers in 2024 were $3.6…ABC Company started its business in 2019. It sells an equipment with a 3- year warranty. ABC estimates its warranty costs as a percentage of peso sales. Based on past experience, it is estimated that 4% will be repaired in the first year of warranty, 8% on the second year of warranty and 10% at the last year of warranty period. In 2019, 2020 and 2021, the company was able to sell 10,000 units, 12,000 units and 15,000 units, respectively at a selling price of P 7,500 per unit. The company also incurred actual repair costs of P 500,000, P 1,000,000, and 1,500,000 for years 2019,2020 and 2021, respectively. What amount should ABC Company report as warranty liability as of December 31,2020? A. P 34,800,000 B. P 36,300,000 C. P 58,050,000 D. P 34,300,000Carla Corporation sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2020, Carla sold 20,000 warranty contracts at $132 each. The corporation spent $173,000 servicing warranties during 2020, and it estimates that an additional $865,000 will be spent in the future to service the warranties. Prepare Carla’s journal entry for the sale of contracts. Assume the service costs are inventory costs Prepare Carla’s journal entry for the cost of servicing the warranties. Assume the service costs are inventory costs Prepare Carla’s journal entry for the recognition of warranty revenue. Assume the service costs are inventory costs.
- 1. On January 1, 2019, EROS Company introduced a new line of products that carries a 3-year warranty against factory defects. The product warranties provide assurance that the new line of products 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 the 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 expenditures 2019 P 5,000,000 P 100,000 2020 7,500,00 150,000 2021 10,000,000 200,000 The company's reporting period is a calendar year. How much is the warranty expense for the year 2020? 2. If Chimmy Co. issued a 3-year non-interest bearing note in exchange for an equipment for P 1,000,000, which of the…Waterway Company sells televisions at an average price of $ 934 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 294 televisions and 214 warranty contracts for cash. It estimates the 3-year warranty costs as $21 for pa and accounts for warranties separately. Assume sales occurred on December 31.2020, and parts and $41 for labor, straight-line recognition of warranty revenues ocurs. Part 1 Record any necessary journal entries in 2020. (f no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account tities are automatically indented when amount is entered. Do not indent manually) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Save for Later Attempts: 0 of 5 used Submit Answer Part 2 What liability relative to these transactions would appear on the December 31, 2020,…Pronghorn Computer Company sells computers for $1,800 each, which includes a three-year warranty that requires the company to perform periodic services and to replace defective parts. During 2023, Pronghorn sold 580 computers on account. Based on past experience, the company has estimated the total three-year warranty costs at $80 for parts and $100 for labour. (Assume sales all occur at December 31, 2023.) In 2024, Pronghorn Computer Company incurred actual warranty costs relative to 2023 computer sales of $9,800 for parts and $13,000 for labour. (a) Using the expense warranty approach, prepare the entries to reflect the above transactions (accrual method) for 2023 and 2024. Use Salaries and Wages Payable. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation 2023 (To…
- Metlock Company sells televisions at an average price of $ 939 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 261 warranty contracts for cash. It estimates the 3-year warranty costs as $ 20 for parts and $ 30 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. (a) Record any necessary journal entries in 2020: (b) What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified? In 2019, incurred actual costs relative to 2020 television warranty sales of parts and labor. (c) Record any necessary journal entries in 2020 relative to 2019 television warranties. (d) What amounts relative to the 2019 television warranties would appear on the…Cupola Awning Corporation introduced a new line of commercial awnings in 2024 that carry a two-year warranty against manufacturer's defects. Based on their experience with previous product introductions, warranty costs are expected to approximate 4% of sales. Sales and actual warranty expenditures for the first year of selling the product were: Sales $ 5,770,000 Actual Warranty Expenditures $ 59,500 Required: 1. Does this situation represent a loss contingency? 2. Prepare journal entries that summarize sales of the awnings (assume all credit sales) and any aspects of the warranty that should be recorded during 2024. 3. What amount should Cupola report as a liability at December 31, 2024? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Loss contingency Required 3 Does this situation represent a loss contingency?In 2025, Oriole Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon experience with other products, the estimated warranty costs as a percentage of sales revenue are as follows: First year of warranty. 3% Second year of warranty 5% Sales revenue and actual warranty expenditures for 2025 and 2026 are presented below: Sales revenue Actual warranty expenditures) 2025 $755000 42000 2026 $1051000 72000 What is the estimated warranty liability at the end of 2026? (assume the accrual method)
- Erafone provides a 2-year warranty with one of its products which was first sold in 2020. Erafone sold $1,000,000 of products subject to the warranty. Era Phone expects $125,000 of warranty costs over the next 2 years. In 2020, Erafone spent $70,000 servicing warranty claims. Prepare journal entries in 2020 to record the costs incurred in honoring the warranties (assume expenditures are for repair part costs):Shamrock Company sells a machine for $7,920 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 540 machines in 2025 (warranty expense is incurred half in 2025 and half in 2026). As a result of product testing, the company estimates that the total warranty cost is $334 per machine ($144 parts and $190 labor). Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the following facts? Use "Inventory" account to record the parts portion of the warranty expense. (a) Sale of machinery and warranty expense incurred in 2025. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.)…On December 31, 2022, Delta Company sells equipment to Tchefunkte Inc. for $125,000. Delta includes a 1-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2022. Delta estimates the prices to be $122,000 for the equipment and $3,000 for the cost of the warranty. In addition to the assurance warranty, Delta sold an extended warranty for an additional 2 years for $3,000. How much warranty revenue should Delta recognize in 2022?
