Pinnacle Company prepares quarterly interim financial reports. The entity sells electrical appliances and normally 5% of the customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to P10,000,000.However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the whole year. Sales for the second quarter amounted to P15,000,000. What amount should be reported as warranty expense in the interim income statement for the second quarter? A. 2000000 B. 1250000 C. 1500000 D. 750000
Pinnacle Company prepares quarterly interim financial reports. The entity sells electrical appliances and normally 5% of the customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to P10,000,000.However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the whole year. Sales for the second quarter amounted to P15,000,000. What amount should be reported as warranty expense in the interim income statement for the second quarter? A. 2000000 B. 1250000 C. 1500000 D. 750000
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
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 10RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...
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Pinnacle Company prepares quarterly interim financial reports. The entity sells electrical appliances and normally 5% of the customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to P10,000,000.However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the whole year. Sales for the second quarter amounted to P15,000,000. What amount should be reported as warranty expense in the interim income statement for the second quarter?
A. 2000000
B. 1250000
C. 1500000
D. 750000
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