When auditing estimated liability for product warranty, why wouldn't you adjust the prior years under provision...
When auditing estimated liability for product warranty, why wouldn't you adjust the prior years under provision through beginning retained earnings?
Homework Answers
While auditing estimated product warranty liability we do not adjust the prior years under provision through beginning retained earnings because these warranty expense ideally pertain to the previous years and that is why we had booked a warranty expense in the prior years by debiting warranty expense and crediting provision for warranty. Since we have already taken the impact for prior years by making a warranty provision on estimation basis, now when the actual expense is incurred, it is reduced from provision from warranty and the entry for same is made by debiting provision and crediting cash. Hence there is no need to adjust it through beginning retained earnings.
Add Answer to:
When auditing estimated liability for product warranty, why
wouldn't you adjust the prior years under provision...
Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year...
Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year Prior Year Current estimated product warranty payable $3,070 $2,868 Noncurrent estimated product warranty payable 4,345 4,138 Total $7,415 $7,006 Assume that Harbour Company's sales were $135,548 million in the current year and that the total paid on warranty claims during the current year was $3,100 million. Required: a. Why are short, and long-term estimated warranty liabilities separately disclosed? b. Provide the journal entry for...
Accrued Product Warranty Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in...
Accrued Product Warranty Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year Prior Year Current estimated product warranty payable $13,769 $13,201 Noncurrent estimated product warranty payable 8,375 7,381 $22,144 $20,582 Total Assume that Harbour's sales were $162,391 million in current Year and that the total paid on warranty claims during the current year was $14,195 million a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate...
Estimated Warranty Liability Oven Roasted Co. sold $387,000 of equipment during January under a six-month warranty....
Estimated Warranty Liability Oven Roasted Co. sold $387,000 of equipment during January under a six-month warranty. The cost to repair defects under the warranty is estimated at 5.5% of the sales price. On August 15, a customer required a $250 part replacement, plus $238 of labor under the warranty. Required: (a) Provide the journal entry for the estimated warranty expense on January 31 for January sales. Jan. 31 Product Warranty Expense (b) Provide the journal entry for the August 15...
The balance of the Estimated Warranty Liability account was $12,700 on January 1, 2019, and $17,600...
The balance of the Estimated Warranty Liability account was $12,700 on January 1, 2019, and $17,600 on December 31, 2019. Based on an analysis of warranty claims during the past several years, this year's warranty provision was established at 1.5% of sales, and sales during the year were $1,340,000. Required: What amount of warranty expense will appear on the income statement for the year ended December 31, 2019? What were the actual costs of servicing products under warranty during the...
Estimated Warranty Liability Cook-Rite Co. sold $687,000 of equipment during January under a six-month warranty. The...
Estimated Warranty Liability Cook-Rite Co. sold $687,000 of equipment during January under a six-month warranty. The cost to repair defects under the warranty is estimated at 7.5% of the sales price. On August 15, a customer required a $213 part replacement, plus $186 of labor under the warranty Required: (a) Provide the journal entry for the estimated warranty expense on January 31 for January sales Jan. 31 L U C (b) Provide the journal entry for the August 15 warranty...
Gonzales Co. provides warranties for many of its products. Its estimated warranty liability account had a...
Gonzales Co. provides warranties for many of its products. Its estimated warranty liability account had a balance of $164,800 at January 1, 2017. Based on an analysis of warranty claims during the past several years, the warranty expense for 2017 was established at 0.4 percent of sales. During 2017, the actual cost of servicing products under warranty was $68,400, and sales were $16,400,000. Required: 1. Compute the warranty expense that should appear on the company’s statement of earnings for the...
Thank you!!! CHAPTER 10 Current Liabilities Problem 10-3A Estimated product warranty llabilities LO4 CHECK FIGURES: 2....
Thank you!!!
CHAPTER 10 Current Liabilities Problem 10-3A Estimated product warranty llabilities LO4 CHECK FIGURES: 2. $1,750; 3.$40,600; 4. $40,145 On November 10, 2017, Singh Electronics began to buy and resell scanners for $55 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned, the company simply throws it away and mails a new one from...
During 2017, Eaton Co. introduced a new product carrying a two-year warranty against defects. The estimated...
During 2017, Eaton Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar 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, 2017 and 2018 are as follows: Actual Warranty Sales Expenditures 2017 $ 400,000 $8,000 2018 600,000 14,000 $1,000,000 $22,000 At December 31, 2018, (assuming the accrual...
Thank you very much for this question! Problem 10-3A Estlmated product warranty liabilitles L04 CHECK FIGURES:...
Thank you very much for this question!
Problem 10-3A Estlmated product warranty liabilitles L04 CHECK FIGURES: 2. $1,750; 3. $40,600; 4. $40,145 On November 10, 2017, Singh Electronics began to buy and resell scanners for $65 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned simply throws it away and mails a new one from...
Instructions Quantas industries sold $280,000 of consumer electronics during January under a one year warranty. The...
Instructions Quantas industries sold $280,000 of consumer electronics during January under a one year warranty. The cost to repair defects under the warranty is estimated at 5 June 20, a customer was given $143 cash under terms of the warranty of the sales price Journalize the entry to record (a) the estimated warranty expense on January 31 for January sales on page 10 of the journal and (b) the June 20 warranty work on page 14 of the journal Refer...
Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year Prior Year Current estimated product warranty payable $3,070 $2,868 Noncurrent estimated product warranty payable 4,345 4,138 Total $7,415 $7,006 Assume that Harbour Company's sales were $135,548 million in the current year and that the total paid on warranty claims during the current year was $3,100 million. Required: a. Why are short, and long-term estimated warranty liabilities separately disclosed? b. Provide the journal entry for...
Accrued Product Warranty Harbour Company disclosed estimated product warranty payable for comparative years as follows: (in millions) Current Year Prior Year Current estimated product warranty payable $13,769 $13,201 Noncurrent estimated product warranty payable 8,375 7,381 $22,144 $20,582 Total Assume that Harbour's sales were $162,391 million in current Year and that the total paid on warranty claims during the current year was $14,195 million a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate...
Estimated Warranty Liability Cook-Rite Co. sold $687,000 of equipment during January under a six-month warranty. The cost to repair defects under the warranty is estimated at 7.5% of the sales price. On August 15, a customer required a $213 part replacement, plus $186 of labor under the warranty Required: (a) Provide the journal entry for the estimated warranty expense on January 31 for January sales Jan. 31 L U C (b) Provide the journal entry for the August 15 warranty...
Thank you!!!
CHAPTER 10 Current Liabilities Problem 10-3A Estimated product warranty llabilities LO4 CHECK FIGURES: 2. $1,750; 3.$40,600; 4. $40,145 On November 10, 2017, Singh Electronics began to buy and resell scanners for $55 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned, the company simply throws it away and mails a new one from...
Thank you very much for this question!
Problem 10-3A Estlmated product warranty liabilitles L04 CHECK FIGURES: 2. $1,750; 3. $40,600; 4. $40,145 On November 10, 2017, Singh Electronics began to buy and resell scanners for $65 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned simply throws it away and mails a new one from...
Instructions Quantas industries sold $280,000 of consumer electronics during January under a one year warranty. The cost to repair defects under the warranty is estimated at 5 June 20, a customer was given $143 cash under terms of the warranty of the sales price Journalize the entry to record (a) the estimated warranty expense on January 31 for January sales on page 10 of the journal and (b) the June 20 warranty work on page 14 of the journal Refer...
Most questions answered within 3 hours.
-
Benning Inc is a defense contractor that uses job costing.
Because the firm uses a perpetual...
asked 35 minutes ago -
What is the net ionic equation for the reaction that would occur
when an aqueous solution...
asked 3 hours ago -
A
student bought $1000 worth of furniture. What is the equivalent
annual cost if it is...
asked 3 hours ago -
What taboo subject did Ida B. Wells suggest was consensual
between black men and white women?...
asked 5 hours ago -
You have just been hired by the EPA to help with the new gas
mileage standards...
asked 6 hours ago -
4) A firm is hit by increases in its wage rate, w.
a) How does this...
asked 6 hours ago -
A square current loop 5.4 cm on each side carries a 510 mA
current. The loop...
asked 8 hours ago -
What are five tips in conducting knowledge assessment/literature
review research? Each of these tips needs to...
asked 9 hours ago -
Antigen presenting cells link innate and adaptive immune
responses. In the theoretical scenario where phagosomes cannot...
asked 9 hours ago -
Dealing with conflict, in my opinion, is a skill and an art. I
believe that those...
asked 10 hours ago -
6. A long straight wire with circular cross section and radius
1.5 cm carries a 1.2...
asked 10 hours ago -
Deacon Corporation has provided the following financial data
from its balance sheet and income statement:
Year...
asked 10 hours ago