HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
7th Edition
ISBN: 9780136505273
Author: MILLER-NOBLES
Publisher: PEARSON
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Question
Chapter 11, Problem 7QC
To determine
Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.
To identify: The correct answer by solving estimated warranty payable at the end of 2016.
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Students have asked these similar questions
Wells Electric (WE) owed Estimated Warranty Payable of $1,200 at the end of 2017. During 2018, WE made sales of $120,000 and expects product warranties to cost the company 3% of the sales. During 2018, WE paid $2,300 for warranties. What is WE’s Estimated Warranty Payable at the end of 2018?
a. $2,300
b. $2,500
c. $3,600
d. $4,800
6 Miele Appliances owed estimated warranty payable of $1000 at the end of 2016. During
2017, Miele made sales of $100000 and expects product warranties to cost 4% of the sales.
During 2017, Miele paid $2800 for warranties. What is Miele's estimated warranty payable
at the end of 2017?
a $3 500
b $2 500
c $2 200
d $1 500
Roy 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. $3,400
Chapter 11 Solutions
HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
Ch. 11 - On January 1, 2016, a business borrowed 18,000 on...Ch. 11 - A company sells 180,000 (selling price) of goods...Ch. 11 - Prob. 3QCCh. 11 - Prob. 4QCCh. 11 - Prob. 5QCCh. 11 - Prob. 7QCCh. 11 - Vega Company expects to pay a 4% bonus on net...Ch. 11 - Prob. 9QCCh. 11 - Prob. 10QCCh. 11 - Prob. 1RQ
Ch. 11 - What is a current liability? Provide some examples...Ch. 11 - How is sales tax recorded? Is it considered an...Ch. 11 - How do unearned revenues arise?Ch. 11 - What do short-term notes payable represent?Ch. 11 - Coltrane Company has a 5,000 note payable that is...Ch. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 10RQCh. 11 - What are the two main controls for payroll?...Ch. 11 - When do businesses record warranty expense, and...Ch. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQ
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- 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_forward1. Peter Inc. manufactures and sells computer monitors with a three-year warranty. Warranty costs are expected to average 8% of sales during the warranty period. The following table shows the sales and actual warranty payments during the first two years of operations: Year Sales Warranty Payments 2016 $560,000 $6,160 2017 760,000 32,000 Based on these facts, what amount of warranty liability should Peter Inc. report on its balance sheet at December 31, 2017? a) $38,160 b) $67,440 c) $105,600 d) $32,000arrow_forwardDuring 2018, P started manufacturing and selling a new product with a three-year warranty. Based upon past experience with similar products, P estimated the following warranty costs as a % of sales dollars: First year of warranty 2.25% Second year of warranty 2.75% Third year of warranty 3.50% Sales and actual warranty expenditures for 2014 and 2015 were as follows: 2018 2019 Sales $940,000 $1,005,000 Actual warranty expenditures 12,900 47,100 Prepare the entry P made as of 12-31-18 to accrue for its estimated warranty liability. Prepare the entry P made during 2018 to account for actual warranty…arrow_forward
- problem and solution is already provided I just have some questions how does the predicted warranty expense ( the last part and it is also highlited) computed? answer: Total warranty expense of both the years is computed using the equation given below: Total warranty expense = {Total sales of 2014 + Total sales of 2015} × {Warranty rate of first and second year} = {P 4,200,000 + P 6,960,000} × {3% + 5%} = P 11,160,000 × 8% = P 892,800 Estimated warranty liability on December 31, 2015 is computed using the equation given below: Estimated warranty liability = Total warranty expense - Actual warranty expenditure of 2014 & 2015 = P 892,800 - {P 148,800 + P 180,000} = P 564,000 Hence, the estimated warranty liability on December 31, 2015 should be P 564,000. Step 2 b).Predicted…arrow_forwardAdjusting Income Statements For Warranty Expense Income statement data for Whirlpool Industries follow. Adjust the income statement for 2014, 2015, and 2016 under the assumption that warranty expense is a constant 1.547% of net sales for each year. The company's tax rate is 30%. $ millions Net sales Warranty expense 2016 2015 2014 414 $26,566 $26,296 $25,524 438 361 Determine the adjusted warranty expense for each year. Round answers to one decimal. $ millions 2016 2015 2014 Adjusted warranty expense $ $ $ Determine the income statement adjustments for each year. • Round answers to one decimal. • Use a negative sign to indicate if the adjustment decreases an account balance. Income Statement Adjustments, $ mil. 2016 2015 Warranty expense Income tax expense Net Income 2014arrow_forwardSmith Electic (SE) owed Estimated Warranty Payable of $1,100 at the end of 2023. During 2024, SE made sales of $100,000 and expects product warranties to cost the company 5% of the sales. During 2024, SE paid $2,600 for warranties. What is SE's Estimated Warranty Payable at the end of 2024? OA. $2,600 OB. $5,000 O C. $6,100 OD. $3,500arrow_forward
- During 2017, Blevert Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale. Sales and actual warranty expenditures for the first three- year period were as follows: Sales. Actual Warranty Expenditures 2017 $700,000. $5,000 2018 $1,300,000. $23,000 2019 $2,100,000. $100,000 $4,100,000. $128,000 What amount should Blevert report as a liability at Dec 31, 2018? a. $133,000 b. $235,000 c. $212,000 d. $156,000arrow_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_forward1. CM Company borrowed 2,000,000 from a bank on June 30, 2015. The loan has an annual interest rate of 10% and the principal is payable at the end of every quarter amounting to 250,000. The first quarterly payment will be on September 30, 2015. Prepare an amortization schedule for 2015 until the loan is fully paid on June 30, 2017. How much interest expense is incurred in 2015 and 2016 with respect to this loan?arrow_forward
- Question Happy Bank loaned P5,500,000 to Sadako Company on January 1, 2016. The initial loan repayment terms include a 10% interest rate plus annual principal payments of P1,100,000 on December 31 each year. Sadako made the required interest payment in 2016 but did not make the P1,100,000 principal payment nor the P550,000 interest payment for 2017. Happy is preparing its annual financial statements for December 31, 2017. Sadako is having financial difficulty, and Happy has concluded that the loan is impaired. Analysis of Sadako's financial condition on December 31, 2017, indicates the principal payments will be collected, but the collection of interest is unlikely. Happy did not accrue interest on December 31, 2017. The projected cash flows are: December 31, 2018 December 31, 2019 December 31, 2020 1,750,000 2,000,000 1,750,000 1. What is the loan impairment loss on December 31, 2017? 2. What is the carrying value of the loan receivable on December 31, 2019?arrow_forwardOther accrued liabilities—warranties Kohl Co. provides warranties for many of its products. The January 1, 2016, balance of the Estimated Warranty Liability account was $35,200. Based on an analysis of warranty claims during the past several years, this year’s warranty provision was established at 0.4% of sales. During 2016, the actual cost of servicing products under warranty was $15,600, and sales were $3,600,000.Page 258Required:What amount of Warranty Expense will appear on Kohl Co.’s income statement for the year ended December 31, 2016?What amount will be reported in the Estimated Warranty Liability account on the December 31, 2016, balance sheet?arrow_forwardIn 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 49,000arrow_forward
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