Electro Company makes battery powered ebikes. They cost $1,600 to make which consists of $400 labor and $1,200 parts. They are sold with a one-year unlimited warranty on parts only (customer pays labor) and this year Electro sold 6,600 bikes Experience shows that 10% of bikes make a warranty claim and the average claim is $71. At year end 362 bikes from this year's sales have already made a claim. Required 1 Assume there were no other transactions in the year, what is the amount credited on Estimated Liability for Product Warranties when doing the year end AJE? $ 21158 Required 2 Assume there were no other transactions in the year, what is the amount of Warranty expense reported in the income statement for the year? $ I Required 3. Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year? $

Electro Company makes battery powered ebikes. They cost $1,600 to make which consists of $400 labor and $1,200 parts. They are sold with a one-year unlimited warranty on parts only (customer pays labor) and this year Electro sold 6,600 bikes Experience shows that 10% of bikes make a warranty claim and the average claim is $71. At year end 362 bikes from this year's sales have already made a claim. Required 1 Assume there were no other transactions in the year, what is the amount credited on Estimated Liability for Product Warranties when doing the year end AJE? $ 21158 Required 2 Assume there were no other transactions in the year, what is the amount of Warranty expense reported in the income statement for the year? $ I Required 3. Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year? $

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10RE

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Electro Company makes battery powered ebikes. They cost $1,600 to make which consists of $400 labor and $1,200 parts. They are sold with a one-year unlimited warranty on parts only (customer pays labor) and this year Electro sold 6,600 bikes. Experience shows that 10% of bikes make a warranty claim and the average claim is $69. At year end 358 bikes from this year's sales have already made a claim. Required 1: Assume there were no other transactions in the year, what is the amount credited on Estimated Liability for Product Warranties when doing the year end AJE? $ Required 2: Assume there were no other transactions in the year, what is the amount of Warranty expense reported in the income statement for the year? $ Required 3: Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year?
A company sold 122 bikes at $180 each. The bikes carry a 3-year warranty for defects. The company estimates that repair costs will average 5.0% of the total selling price. The estimated warranty liability at the beginning of the year was $1,100 and $1,500 in claims were actually incurred during the year to honor the warranty. What was the ending balance in the estimated warranty liability account? Select one: a. $1,098 b. $698 c. $1,272 d. $400 e. $1,498| This has been asked here previously, but different posts with the same questions have different answers. What is the correct one?
Pizza Shop sells toaster ovens with a one-year warranty to fix any defects. For the current year, 100 toaster ovens have been sold. By the end of the year 4 ovens have been fixed for an average of $80 each. Management estimates that 5 more of the 100 sold will need to be fixed next year for an estimated $80 each. For how much should Pizza Shop report warranty liability at the end of the current year? a. $400.b. $320.c. $720.d. $0.
Jonus Bike Inc., manufactures and sells high-end bicycles. Each bicycle that the company sells comes with a 5 year unlimited warranty. Based on past experience, Jonus' accountant estimates that for every $3,000 worth of sales, Jonus will have to pay out $78 in warranty costs. Do not enter dollar signs or commas in the input boxes.a) This year, Jonus Bike Inc. had sales of $1,080,000. First, calculate the estimated warranty costs based on the accountant's analysis. Date Account Title and Explanation Debit Credit Dec 31 Answer Answer Answer Answer Record warranty liability b) As part of the warranty program, Jonus had to make repairs to the seat post of 21 bicycles that he sold. Jonus spent $1,390 cash. Prepare the journal entry to record this transaction. Date Account Title and Explanation Debit Credit Dec 31 Answer Answer Answer Answer Record warranty repairs
Modem Appliances, Inc. sells food processors for $150 with a 120-day warranty against defects. Past experience indicates that 5% of the processors will have some defect during the warranty period and that the necessary repairs and adjustments will cost $25 per defective unit. Sales for August are $225,000. What is the estimated liability for product warranties for units sold in August? Select one: a. $3,000 b. $1,800 C. $11,250 d. $1,875 e. None of the above
Hitzu Company sold a copler (that costs $7.500) for $15,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 4% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2 the copler requires on-site repairs that are completed the same day. The repairs cost $111 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copler.
Computer 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)…
Presley Company sells a product that includes a one-year warranty on parts and labor. During the year, 10,000 units are sold. Presley expects that 3% of the units will be defective and that the average warranty cost will be $50 per unit. Actual warranty costs incurred during the year were $14,000. Instructions Prepare the journal entries to record (a) the estimated warranty costs and (b) the actual costs incurred. Prepare the necessary journal entries for the following transactions: (a) On September 1, Lore Company borrowed $150,000 from National Bank on a 6-month, 8% note. (b) On December 31, Lore Company accrued interest (assume adjusting entries are only made at the end of the year).
.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 million
Hitzu Co. sold a copier (that costs $6,500) for $13,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 5% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $140 for materials taken from the repair parts inventory. These are the only repairs required in Year 2 for this copier. 1. How much warranty expense does the company report for this copier in Year 1? Warranty expense 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1? Estimated warranty liability 3. How much is the estimated warranty liability for this copier as of December 31 of Year 2?
Excom sells radios and each unit carries a two-year replacement warranty. The cost of repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 110 radios for $40 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense? Оа. S40 Оb. $21 Oc. $220 Od. $2,310 Previous
Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Hitzu Company sold a copier (that costs $6,500) for $13,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 5% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $93 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier. Exercise 9-13 (Algo) Financlal statement impact of warranty transactions LO P4 Analyze each of the following transactions: (a) the copier's sale; (b) the adjustment to recognize the warranty expense on December 31 of Year 1; and (c) the repairs that occur on January 5 of Year 2. Show each transaction's effect on the accounting equation-specifically, identify the…