In 2020, Jimi Hendrix Corporation began selling a new line of guitars. The company guarantees the instruments against manufacturing defects for two years from the date of sale. The company has examined the warranty costs associated with previous models and estimates that the warranty costs - as a proportion of sales value - related to the sales will be: First year of warranty Second year of warranty In 2020 and 2021, sales were respectively $750,000 and $1,050,000. Warranty expenditure in 2020 2021 were respectively $45,000 and $75,000. $144,000 What amount should be shown as the estimated warranty liability at the end of 2021? (assume the accrual method) O $24,000 3% $30,000 5% $96,000

Early in 2020, Swifty Equipment Company sold 600 Rollomatics at $5,700 each. During 2020, Swifty spent $20,000 servicing the 2- year assurance warranties that accompany the Rollomatic. All sales transactions are on a cash basis. (a) Prepare 2020 entries for Swifty. Assume that Swifty estimates the total cost of servicing the warranties in the second year will be $37,000. (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. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit List of Accounts

Carla Vista Resellers Ltd. (CVRL) sells gently used and refurbished appliances. The company provides a three-month warranty that is included in the cost of the appliance. Claims under the warranties vary from replacing defective parts to providing customers with new appliances if repairs cannot be made. During 2024, the estimated cost related to the three-month warranties was $36,480, of which $24,000 had been incurred before year end ($18,240 on replacement appliances and $5,760 for parts). For an additional charge of $144, CVRL also offers extended warranty coverage for three years on its refurbished appliances. This amount is expected to cover the costs associated with the extended warranties. During 2024, CVRL sold 480 three-year warranty plans. The costs incurred during the year for repairs and replacements under these plans amounted to $14,400. Based on experience, the company estimates that its total warranty costs over the three-year coverage period will be $43,200, which it…

1. General Motors guarantees automobiles against defects for five years or 160,000 km, whichever comes first. Suppose GM can expect warranty costs during the five-year period to add up to 4% of sales. Assume that Forbes Motors made sales of $2,500,000 on their Buick line during 2020. Forbes received cash for 13% of the sales and took notes receivable for the remainder. Payments to satisfy customer warranty claims totalled $75,000 during 2020. Post to the Estimated Warranty Payable T-account. The beginning balance was $43,000. At the end of 2020, how much in estimated warranty payable does Forbes owe its customers?

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.

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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 $2.8 million. Accordingly, the following entries relating to the contingency for warranty costs were recorded during the first year of selling the product: General Journal Accrued liability and expense Warranty expense (2% × $2,800,000) Warranty liability Actual expenditures (summary entry) Warranty liability Cash Debit 56,000 Required 1 Required 2 25,000 Credit 56,000 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%. View transaction list 25,000 Required: 1. Assuming…

During 2020, Polly started manufacturing and selling a new product with a three-year warranty. Polly prepares annual AJES once each year as 12-31. Based upon past experience with comparable products, Polly estimated the following warranty costs as a % of sales dollars: 2% First year of warranty Second year of warranty Third year of warranty Polly's sales during 2020 and 2021, respectively, were $600,000 and $720,000. Polly's actual warranty expenditures for 2020 and 2021, respectively, were $5,000 and $21,000. . What was Polly's estimated warranty expense amount for 2021? What was Polly's estimated warranty liability amount as of 12-31-21? 3% 5% .