P-5*** SAN Company began selling new line of product that carries a one year warranty against defects. Based upon experience the estimated warranty costs related to peso sales is 5%. The selling price per unit of product is P1500. The number of units sold in 2011 and 2012 are 12,000 units and 20,000 units, respectively. Actual warranty expenditures for the year 2011 amounted to P800,000 and in 2012, the warranty expenditures amountedto P1,200,000. 8. At December 31,2011 and December 31,2012 financial statements, how much shall be reported as Accrual approach Expense approach Estimated warranty liability,2011 Warranty expense,2011 Estimated warranty liability,2012

P-5*** SAN Company began selling new line of product that carries a one year warranty against defects. Based upon experience the estimated warranty costs related to peso sales is 5%. The selling price per unit of product is P1500. The number of units sold in 2011 and 2012 are 12,000 units and 20,000 units, respectively. Actual warranty expenditures for the year 2011 amounted to P800,000 and in 2012, the warranty expenditures amountedto P1,200,000. 8. At December 31,2011 and December 31,2012 financial statements, how much shall be reported as Accrual approach Expense approach Estimated warranty liability,2011 Warranty expense,2011 Estimated warranty liability,2012

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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Maps During 2005, Cory Company introduced a new line of machines that carry a two-year warranty against manufacturer's defects. Based on industry experience, the estimated warranty costs related to peso sales are as follows: Year of sale 4% Year after sale 6% Sales and actual warranty expenditures for the years ended December 31, 2005 and 2006 were as follows: Actual warranty Sales expenditures 2005 2006 500,000 700,000 P 15,000 47,000 Pl,200,000 P 62,000 What amount should Cory report as its estimated warranty liability at December 31, 2006? PO b. P16,000 c. P42,000 d. P58,000 2.
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.
In 2010, Payton Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, 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? O None of these O 29,000 O 19,000 O 8,000 O 49,000
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
Kap Co. offers a three year warranty on its products. Kap previously estimated warranty costs to be 2% of sales. Due to a technological advance in production at the beginning of year 3, Kap now believes 1% of sales to be a better estimate of warranty costs. Warranty costs of P800,000 and P960,000 were reported in year 1 and year 2, respectively. Sales for year 3 were P50,000,000. 1. What amount should be presented in Kap's year 3 financial statements as warranty expense?
.11 Mobiles Co sells goods with a one year warranty under which customers are covered for any defect that /becomes apparent within a year of purchase. In calendar year 20X4, Mobiles Co sold 100,000 units. The company expects warranty claims for 5% of units sold. Half of these claims will be for a major defect, with an average claim value of $50. The other half of these claims will be for a minor defect, defect, with an average claim value of $50. The other half of these claims will be for a minor delee, with an average claim value of $10. What amount should Mobiles Co include as a provision in the statement of financial position for the year ended 31 December 20X4? $125,000 $ 25,000 $300,000 D $150,000 A C
KOREA Company prepares quarterly interim financial reports in accordance with IAS 34, Interim Financial Reporting. The company sells electronics and normally, 5% of customers claim on their warranty. The provision for the first quarter was calculated as 5% of sales to date, which is P10 million. However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the entire year. Sales made during the second quarter were P15 million. How much is the warranty expense to be recognized by KOREA on its income statement for the second quarter?
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
S11-3 Accounting for warranty expense and warranty payable Toyota, the car manufacturer, guarantees its vehicles for three years or 100000 kilometres, whichever comes first. Suppose Toyota's experience indicates that it can expect warranty costs to equal 3% of sales. Assume that Thomson Toyota in Adelaide makes sales of Toyota Corollas totalling $500000 during 2016, its first year of operations. The business receives cash for 30% of the sales and loans receivable for the remainder. Payments to satisfy customer warranty claims totalled $10000 during 2016. (These payments are not reimbursed by Toyota.) Requirements 1 Record the sales, warranty expense and warranty payments for Thomson Toyota. 2 Post to the Estimated warranty payable T-account. At the end of 2016, how much in warranty costs does Thomson Toyota still expect to pay?
Among the transactions of WRY TO TWIST Company for the first two quarters of 20x1 were the following: WRY recognized a ₱200,000 write-down in its inventory during the first quarter. WRY had expected that the write-down will reverse in the second quarter, and in fact, in the second quarter, the recovery exceeded the previous write-down by ₱40,000.WRY provides warranty for its sales. In the first quarter, WRY estimated a 5% warranty obligation on its first quarter sales of ₱2,000,000. In the second quarter, a change in accounting estimate was made. It was estimated that the cost of warranty should be 10% of total sales. The second quarter sales amounted to ₱2,400,000.WRY has been estimating its bad debt expense as 2% of credit sales. However, in the second quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for doubtful accounts as of June 30, 20x1 is computed at ₱60,000. The allowance has a balance of ₱10,000 at the…
5. Calm Co. provides warranty for its products. Experience shows that 10% of products sold require warranty repairs and that 70% of the warranty costs are expended in the year of sale and 30% in the following year. Half of the defective products require minor repairs that cost 20% of the sale price, while the other half require major repairs that cost 70% of the sale price: A 3% risk adjustment factor is considered appropriate reflect the uncertainties in the cash flow estimates. Sales of P4,000,000 were made evenly throughout 20x1. The outflows for repairs in 20x2 (for the products sold in 20x1) are expected to take place on June 30, 20x2. The appropriate discount factor is 0.95238. How much is the warranty provision at December 31, 20x1? a. 264,857 b. 176,571 c. 105,943 d.52,971
H9.C6 On October 29, Lobo Company began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards it and malls a new one from Merchandise Inventory to the customer. The company's cost per new razor Is $20 and its retall selling price is $75. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred. November 11 Sold 105 razors for $7,875 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 15 razors that were returned under the warranty. December 16 Sold 220 razors for $16,500 cash. December 29 Replaced 30 razors that were returned under the warranty. December 31 Recognized warranty expense related to December sales with an adjusting entry. January 5 Sold 150 razors for $11, 250 cash. January 17 Replaced 50 razors that were returned under the warranty. January 31 Recognized warranty expense related to January…