Homework Answers
Warranty Expense = 1,000,000 x 30% x $15 + 1,000,000 x 10% x $5 = $5,000,000
| Account Titles | Debit | Credit | |
| 1 | Warranty Expense | $ 5,000,000 | |
| Warranty Payable | $ 5,000,000 | ||
| 2 | Income Tax Expense | $ 400,000 | |
| Income Tax Payable | $ 400,000 |
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The following situations relate to Bolivia Company. 1. Bolivia provides a warranty with all its products...
1. Bolivia provides a warranty with all its products it sells. It estimates that it will...
1.
Bolivia provides a warranty with all its products it sells. It
estimates that it will sell 1,000,000 units of its product for the
year ended December 31, 2020, and that its total revenue for the
product will be $100,000,000. It also estimates that 60% of the
product will have no defects, 30% will have major defects, and 10%
will have minor defects. The cost of a minor defect is estimated to
be $5 for each product sold, and the...
Ivanhoe Factory provides a 2 year warranty with one of its products which was first sold...
Ivanhoe Factory provides a 2 year warranty with one of its products which was first sold in 2020. Ivanhoe sold $1,010,100 of products subject to the warranty. Ivanhoe expects $113,910 of warranty costs over the next 2 years. In that year, Ivanhoe spent $63,100 service warranty cains. Prepare Ivanhoe's Journal entry to record the sales (Ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. Of no entry is required, select "No Entry"...
Part (b) only Muin Company provides assurance type warranties and estimates its warranty liability at 4%...
Part (b) only
Muin Company provides assurance type warranties and estimates its warranty liability at 4% of sales. Last year (2019), the company sold 340,000 units and they expected to incur $60 of repairs for each one that is retumed. During 2020 the company incurred $777,000 in actual warranty repairs. Muin has a December 31 year end. *(a) Your answer is correct. Calculate the balance of any warranty provision the company will report relating to its 2019 sales as at...
Cullumber Manufacturing sells its products with a 75-day warranty for defective merchandise. Based on past experience,...
Cullumber Manufacturing sells its products with a 75-day warranty for defective merchandise. Based on past experience, Cullumber estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is NT$13 (amounts in thousands). The units sold and units defective that occurred during the last 2 months of 2020 are as follows. Month Units Sold Units Defective Prior to December 31 630 November December 28,000...
On January 1, 2020, Oriole Ltd. sold on account 1,400 units of its product for a...
On January 1, 2020, Oriole Ltd. sold on account 1,400 units of its product for a total price of $567,000 with a warranty guarantee that the products were free of any defects. The products have a one-year assurance-type warranty and Oriole estimates that the cost will be $23,800. The cost of the units is $473,000. In addition, the company sold extended warranties related to 600 units for a one-year period beyond the one-year assurance period at a cost of $16,500....
Coronado Company sells a machine for $7,080 with a 12-month warranty agreement that requires the company...
Coronado Company sells a machine for $7,080 with a 12-month
warranty agreement that requires the company to replace all
defective parts and to provide the repair labor at no cost to the
customers. With sales being made evenly throughout the year, the
company sells 580 machines in 2020 (warranty expense is incurred
half in 2020 and half in 2021). As a result of product testing, the
company estimates that the warranty cost is $430 per machine ($190
parts and $240...
Waterway Company sells a machine for $6,660 with a 12-month warranty agreement that requires the company...
Waterway Company sells a machine for $6,660 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 620 machines in 2020 (warranty expense is incurred half in 2020 and half in 2021). As a result of product testing, the company estimates that the warranty cost is $277 per machine ($118 parts and $159...
On January 1, 2020, Ivanhoe Ltd. sold on account 1,000 units of its product for a...
On January 1, 2020, Ivanhoe Ltd. sold on account 1,000 units of
its product for a total price of $571,000 with a warranty guarantee
that the products were free of any defects. The products have a
one-year assurance-type warranty and Ivanhoe estimates that the
cost will be $26,200. The cost of the units is $471,000. In
addition, the company sold extended warranties related to 600 units
for a one-year period beyond the one-year assurance period at a
cost of $16,700....
Brief Exercise 13-13 Bonita Factory provides a 2-year warranty with one of its products which was...
Brief Exercise 13-13
Bonita Factory provides a 2-year warranty with one of its products
which was first sold in 2017. Bonita sold $909,800 of products
subject to the warranty. Bonita expects $124,480 of warranty costs
over the next 2 years. In that year, Bonita spent $73,090 servicing
warranty claims. Prepare Bonita’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...
Delta Company includes a one-year limited warranty on all products that is sells. The warranty covers...
Delta Company includes a one-year limited warranty on all products that is sells. The warranty covers the replacement or repair of defective products. On December 31, 2020, the company incurred $3,000 in costs to repair a product under the warranty. The journal entry to record this event would include: Question 4 options: debit to Warranty Liability of $3,000 credit to Warranty Liability of $3,000 debit to Warranty Expense of $3,000 credit to Warranty Expense of $3,000
1.
Bolivia provides a warranty with all its products it sells. It
estimates that it will sell 1,000,000 units of its product for the
year ended December 31, 2020, and that its total revenue for the
product will be $100,000,000. It also estimates that 60% of the
product will have no defects, 30% will have major defects, and 10%
will have minor defects. The cost of a minor defect is estimated to
be $5 for each product sold, and the...
Ivanhoe Factory provides a 2 year warranty with one of its products which was first sold in 2020. Ivanhoe sold $1,010,100 of products subject to the warranty. Ivanhoe expects $113,910 of warranty costs over the next 2 years. In that year, Ivanhoe spent $63,100 service warranty cains. Prepare Ivanhoe's Journal entry to record the sales (Ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. Of no entry is required, select "No Entry"...
Part (b) only
Muin Company provides assurance type warranties and estimates its warranty liability at 4% of sales. Last year (2019), the company sold 340,000 units and they expected to incur $60 of repairs for each one that is retumed. During 2020 the company incurred $777,000 in actual warranty repairs. Muin has a December 31 year end. *(a) Your answer is correct. Calculate the balance of any warranty provision the company will report relating to its 2019 sales as at...
Cullumber Manufacturing sells its products with a 75-day warranty for defective merchandise. Based on past experience, Cullumber estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is NT$13 (amounts in thousands). The units sold and units defective that occurred during the last 2 months of 2020 are as follows. Month Units Sold Units Defective Prior to December 31 630 November December 28,000...
On January 1, 2020, Oriole Ltd. sold on account 1,400 units of its product for a total price of $567,000 with a warranty guarantee that the products were free of any defects. The products have a one-year assurance-type warranty and Oriole estimates that the cost will be $23,800. The cost of the units is $473,000. In addition, the company sold extended warranties related to 600 units for a one-year period beyond the one-year assurance period at a cost of $16,500....
Coronado Company sells a machine for $7,080 with a 12-month
warranty agreement that requires the company to replace all
defective parts and to provide the repair labor at no cost to the
customers. With sales being made evenly throughout the year, the
company sells 580 machines in 2020 (warranty expense is incurred
half in 2020 and half in 2021). As a result of product testing, the
company estimates that the warranty cost is $430 per machine ($190
parts and $240...
Waterway Company sells a machine for $6,660 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 620 machines in 2020 (warranty expense is incurred half in 2020 and half in 2021). As a result of product testing, the company estimates that the warranty cost is $277 per machine ($118 parts and $159...
On January 1, 2020, Ivanhoe Ltd. sold on account 1,000 units of
its product for a total price of $571,000 with a warranty guarantee
that the products were free of any defects. The products have a
one-year assurance-type warranty and Ivanhoe estimates that the
cost will be $26,200. The cost of the units is $471,000. In
addition, the company sold extended warranties related to 600 units
for a one-year period beyond the one-year assurance period at a
cost of $16,700....
Brief Exercise 13-13
Bonita Factory provides a 2-year warranty with one of its products
which was first sold in 2017. Bonita sold $909,800 of products
subject to the warranty. Bonita expects $124,480 of warranty costs
over the next 2 years. In that year, Bonita spent $73,090 servicing
warranty claims. Prepare Bonita’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...
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