Concept introduction:
Warranty expense is known as the cost that a company has incurred or will incur to repair and replace the goods which he has sold already. Warranty is allowed for a limited period by the company and expenses are limited up to the stipulated amount.
Requirement 1:
The expenses bared by the Scompany in the year of 2013 and what amount is paid by the company.
Concept introduction:
Warranty is the cost that the firm has made or will make to repair and replace the goods which havesold to the customers. Warranty is given for the limited period by the firm and expenses are limited up to the fixed total.
Requirement 2:
To explain:
The company is more accurate while making the provisions.
Concept introduction:
Warranty expense is known as the cost that a company has incurred or will incur to repair and replace the goods which he has sold already. Warranty is allowed for a limited period by the company and expenses are limited up to the stipulated amount.
Requirement 3:
To explain:
Information related to the warranty expenses under footnote 10 in the year of 2013.
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MANAGERIAL ACCOUNTING FUND. W/CONNECT
- 5-a. Compute the extended warranty revenue recognized during 2017 and 2018. (Enter your answers in millions of dollars.) Extended Warranty revenue View transaction list 5-b. Prepare the journal entry to record the revenue recognized in 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions of dollars.) No 1 2018 2017 Transaction A View journal entry worksheet General Journal Extended warranty deferred revenue Extended warranty revenue Debit Credit Ⓒarrow_forwardHazel Gird's products come with a one-year warranty. In 2014, sales totaled 2,500 units. It is expected that warranty repairs will average 10 per unit sold, with 30 percent of repairs completed in 2014 and 70 percent completed in 2015. How much warranty expense should Searches include in its 2014 income statement? Show solution.arrow_forward* Your answer is incorrect. Blue Factory provides a 2-year warranty with one of its products which was first sold in 2025. Blue sold $955,800 of products subject to the warranty. Blue expects $136,410 of warranty costs over the next 2 years. In that year, Blue spent $64,790 servicing warranty claims. Prepare Blue's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (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.) Date During 2025 12/31/25 Account Titles and Explanation Cash Warranty Expense (To record payment for warranty costs incurred) Sales Revenue Warranty Llability (To record sales) Warranty Llability Inventory Debit 955800 136410 64790 Credit DO DO [ 955800 136410 64790arrow_forward
- 1. Otis Company sells calculators that carry a one-year warranty against manufacturer's defects. Based on company experience, warranty costs are estimated at P300 per calculator. During 2017, Otis sold 24,000 calculators, and paid warranty costs of P170,000. In its income statement for the year ended December 31, 2017, how much should Otis report as warranty expense? a. 1,700,000 b. 2,400,000 c. 5,500,000 d. 7,200,000 2. In May 2017, Maive Company filed suit against Wiley, Inc. seeking P850,000 damages for patent infringement. A court verdict in November 2017 awarded Maive P600,000 in damages, but Wiley's appeal is not expected to be decided before 2017. Maive's counsel believes it is probable but not virtually certain that Maive will be successful against Wiley for an estimated amount in the range between P300,000 and P450, 000, with P400,000 considered the most likely amount. What amount should Maive record as contingent asset from lawsuit in the year ended December 31, 2017? a. None…arrow_forwardAn electronic goods retailer sells electronic products with a standard one-year warranty agreement. In addition, the retailer allows its customers to purchase an extended warranty for an additional 2 years for $200. The retailer sold 50,000 units of electronic products during the year ended 30 June 2020. Out of these, 1000 units of products are subject to the extended warranty. Briefly explain how the retailer should account for the extended warranty attached to the 1000 units of the electronic products. You need not show any calculation and journal entry.arrow_forwardStar Wars Computers manufactures and sells pagers and radio paging systems which include a 6-month warranty on product defects. It also sells an extended warranty which provides an additional two years of protection beyond the 6-month warranty. On July 1, 2024, it sold a paging system for $4,500 and an extended warranty for another $1,400. The customer paid for the entire transaction with cash. Assuming a December 31, 2025, fiscal year-end, the journal entry to record the revenue recognized related to the extended warranty in 2025 would include:arrow_forward
- Leppard Corporation sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2017, Leppard sold 20,000 warranty contracts at $99 each. The corporation spent $180,000 servicing warranties during 2017. Prepare Leppard’s journal entries for (a) the sale of contracts, (b) the cost of servicing the warranties, and (c) the recognitionof warranty revenue. Assume the service costs are inventory costs.arrow_forwardRoy Electric (RE) owed Estimated Warranty Payable of $1,200 at the end of 2015. During 2016, RE made sales of $110,000 and expects product warranties to cost the company 2% of the sales. During 2016, RE paid $2,700 for warranties. What is RE's Estimated Warranty Payable at the end of 2016? O A. $700 OB. $2,200 O C. $2,700 OD. $3,400arrow_forwardSkysong Factory provides a 2-year warranty with one of its products which was first sold in 2025. Skysong sold $997,500 of products subject to the warranty. Skysong expects $120,250 of warranty costs over the next 2 years. In that year, Skysong spent $71,080 servicing warranty claims. Prepare Skysong's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (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.) Date During 2025 12/31/25 Account Titles and Explanation (To record payment for warranty costs incurred) (To record sales) Debit Credit 1arrow_forward
- 93. Martok Company sells personal computers for $2,300 each. The price includes a two-year warranty. During 2015, the company sells 400 computers. On the basis of past experience, the warranty costs are estimated to be $250 per computer. The actual warranty costs paid by Martok during 2015 were $65,000. Prepare general journal entries to record the estimated warranty expense and the warranty payments during 2015.arrow_forward0000 000 93. Martok Company sells personal computers for $2.300 each. The price includes a two-year warranty. During 2015, the company sells 400 computers. On the basis of past experience, the warranty costs are estimated to be $250 per computer, The actual warranty costs paid by Martok during 2015 were $65,000. Prepare general journal entries to record the estimated warranty expense and the warranty payments during 2015. 0000 $85,000 Interest of 10% based upon their average capital balances which are: Remainder shared in this ratio $65,000 $50,000 2. 1 (a) Prepare a detailed schedule to show how the profit would be allocated among the three partners. (b) Assume that the revenue and expense accounts have been closed. Prepare the remaining closing entries.arrow_forwardRiverbed Appliances provides a 3-year warranty with one of its products, which was first sold in 2017. Riverbed sold $1,800,000 of products subject to the warranty. Riverbed expects $198,000 of warranty costs over the next 3 years. In 2017, Riverbed spent $104,000 servicing warranty claims.Prepare Riverbed’s journal entries to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs; Riverbed now expects future warranty costs of $113,000.arrow_forward
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