Concord Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based or experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-2% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warrant expenditures for the first three years of business were: Sales Warranty Expenditures 2021 $750,000 $ 15,900 2022 1,010,000 46,000 2023 1,017, 000 80,000 (a) Calculate the amount that Concord should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 SFP using the assurance - type warranty (expense - based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to th rates above. Warranty expense Warranty liability

Concord Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based or experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-2% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warrant expenditures for the first three years of business were: Sales Warranty Expenditures 2021 $750,000 $ 15,900 2022 1,010,000 46,000 2023 1,017, 000 80,000 (a) Calculate the amount that Concord should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 SFP using the assurance - type warranty (expense - based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to th rates above. Warranty expense Warranty liability

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Grouper Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-3% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warranty expenditures for the first three years of business were: Sales Warranty Expenditures 2021 $870,000 $17,100 2022 1,010,000 48,400 2023 1,041,000 80,000 (a) Calculate the amount that Grouper should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 SFP using the assurance-type warranty (expense-based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to the rates above. Warranty expense $ Warranty liability $
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.
During 2020, Red Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 4% within 12 months following sale and 6% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021 are as follows: Sales Actual Expenditures2020 P5,000,000 P150,0002021 6,000,000 550,000At December 31, 2021, what would be reported as estimated warranty liability?a. P360,000 b. P400,000 c. P240,000 d. P50,000
During 2020, Buenas Company introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to peso sales are 4% within 12 months following sale and 6% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021 are as follows: Sales Actual Expenditures P5,000,000 P150,000 6,000,000 550,000 At December 31, 2021, what would be reported as estimated warranty liability? a. P360,000 b. P400,000 c. P240,000 d. P50,000
Osman Corp. sells Product CC15 for $126.00 each. Each unit is covered by a three year warranty, and Osman estimates that the average cost of warranty repairs and replacements is $11.26 per unit over the term of the warranty. Osman reports the following data for its first three years of operations: Units sold Actual warranty costs 2023 11,000 $36,000 2024 22,000 $122,000 2025 35,000 $217,000 What is Osman's warranty liability at December 31, 2024?
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
In 2020, KD 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 peso sales are as follows:First year of warranty 2%Second year of warranty 5%Sales and actual warranty expenditures for 2020 and 2021 are presented below: 2020 2021Sales P900,000 P1,200,000Actual warranty expenditures 30,000 60,000What is the estimated warranty liability at the end of 2021?a. P87,000 b. P24,000 c. P57,000 d. P147,000
Arthur Company sells 1,000 units of radio sets at P9,000 each for cash. Each radio set is under warranty for one year andthe company has estimated from past experience that warranty cost will probably average P500 per unit and that only60% of the units sold will be returned for repairs. During the year, actual payment incurred for repairs is P180,000.What amount would be recorded as estimated warranty liability at the end of the year?a. 300,000 c. 480,000b. 180,000 d. 120,000
During 2021, Eaton Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2021 and 2022 are as follows: Sales Actual Warranty Expenditures 2021 P 800,000 P12,000 2022 1,000,000 30,000 P1,800,000 P42,000 At December 31, 2022, Eaton should report an estimated warranty liability of
In 2019, Caramel 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 peso sales are as follows: First year of warranty 5% Second year of warranty 9% Sales and actual warranty expenditures for 2019 and 2020 are presented below: 2019 2020 Sales P3,000,000 P4,000,000 Actual warranty expenditures 100,000 250,000 Using the accrual method, what amount should Caramel report as a liability…
Veneer Company started selling a new product that carried a two-year warranty against defect. Based upon pastexperience with other products, the estimated warranty costs related to peso sales are computed as follows:first year of warranty 3%second year of warranty 5%Total sales and actual warranty repairs for 2019 and 2020 are given below:2019 2020Sales P420,000 P696,000Actual warranty expenditures 14,880 18,000What amount should Veneer report as its estimated warranty liability as of December 31, 2020?Prepare all entries related to the above transactions of Veneer Company.
During 2019, Angel Co. introduced a new line of appliances 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 Expenditures2019 P 400,000 P 6,0002020 1,000,000 30,0002021 1,400,000 90,000 P2,800,000 P126,000 assume that sales and repairs occurs evenly through-out the year, how much is the estimated warranty liability at December 31, 2021?