Homework Answers
The following is a characteristic of both the sales approach for service-type warranties and the expense approach for assurance type warranties:
d. Warranty expense
In both cases, warranty expense is recorded.
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Which of the following is a characteristic of both the expense approach for assurance-type warranties and...
Glen Arbor Corporation sells DVD players. The corporation also offers its customers a 4-year service- type...
Glen Arbor Corporation sells DVD players. The corporation also offers its customers a 4-year service- type warranty contract. On 1/1/17, Glen Arbor sold 20,000 warranty contracts at $99 each and spent $180,000 servicing warranties during 2017 and $200,000 servicing warranties in 2018. Estimated warranty expense for the four-year period is $800,000. The Sales Warranty (Deferred Revenue) approach is applicable. Assume straight-line amortization. What is the Unearned Warranty Revenue balance at 12/31/18? Select one: a. $1,485,000 b. $990,000 c. $1,600,000 d....
Recording Assurance-Type Warranty Liability Finisher Inc. sells merchandise for $450,000 in 2020 that includes a three-year...
Recording Assurance-Type Warranty Liability Finisher Inc. sells merchandise for $450,000 in 2020 that includes a three-year limited warranty, Warranty costs are estimated to be 19 of sales. The company incurred actual costs of $1,440 in 2020 related to the warranties. a. Record the warranty accrual at the time of sale in 2020. b. Record the adjustment to the warranty accrual for actual warranty costs in 2020. Account Name Cr. . 0 0 D 0 b. 0 0 E pepe cen...
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...
TB Construction Ltd. sold on account units of its product with a one-year assurance warranty guarantee....
TB Construction Ltd. sold on account units of its product with a one-year assurance warranty guarantee. These sales occurred on November 30, 2021. In addition, the company sold on account service-type warranties related to the some of the units for a three-year period beyond the one-year assurance period. By the company's year end, November 30, 2021, no warranty costs were incurred. Other information pertaining to these sales follows: Number of units of product sold Selling price per unit Cost of...
Jumbo Sales Corporation offers warranties on all their electronic goods. Warranty expense is estimated at 3%...
Jumbo Sales Corporation offers warranties on all their electronic goods. Warranty expense is estimated at 3% of sales revenue. In 2013, the company had $595,000 of sales. In the same year, it paid out $8,500 of warranty payments. Which of the following is the entry needed to record the estimated warranty expense? Warranty Expense 17,850 Sales Revenue 17,850 Warranty Expense 17,850 Estimated Warranty Payable 17,850 Warranty Expense 8,500 Estimated Warranty Payable 8,500 Estimated Warranty...
Jumbo Sales Corporation offers warranties on all their electronic goods. Warranty expense is estimated at 3%...
Jumbo Sales Corporation offers warranties on all their electronic goods. Warranty expense is estimated at 3% of sales revenue. In 2013, the company had $595,000 of sales. In the same year, Jumbo paid out $8,500 of warranty payments. Which of the following is the entry needed to record the disbursement of warranty payments? Answers: Warranty Expense 8,500 Estimated Warranty Payable 8,500 Warranty Expense 17,850 Sales Revenue 17,850 Warranty Expense 17,850 Estimated Warranty Payable 17,850...
Entertainment Tonight, Inc. manufactures and sells stereo systems that include an assurance-type warranty for the first...
Entertainment Tonight, Inc. manufactures and sells stereo systems that include an assurance-type warranty for the first 90 days. Entertainment Tonight also offers an optional extended coverage plan under which it will repair or replace any defective part for 2 years beyond the expiration of the assurance-type warranty. The total transaction price for the sale of the stereo system and the extended warranty is $3,000. The standalone price of each is $2,300 and $800, respectively. The estimated cost of the assurance-warranty...
Exercise 13-21 Bridgeport Equipment Limited sold 490 Rollomatics on account during 2017 for $5,700 each. During...
Exercise 13-21 Bridgeport Equipment Limited sold 490 Rollomatics on account during 2017 for $5,700 each. During 2017, Bridgeport spent $34,800 servicing the two-year warranties that are included in each sale of the Rollomatic. All servicing transactions were paid in cash Prepare the 2017 entries for Bridgeport using the assurance-type (expense-based) approach for warranties. Assume that Bridgeport estimates that the total cost of servicing the warranties will be $117,000 for two years. (Credit account titles are automatically indented when the amount...
Jacks sales sells photocopiers and provides parts and services to its customers. The company has 30...
Jacks sales sells photocopiers and provides parts and services to its customers. The company has 30 employees and provide employees with a benefit plan. You are the controller and are looking at the liability section of the balance sheet and have identified several areas for consideration. For each of the areas answer the related questions assuming private entity GAAP is used. Indicate how your answer would be different if the company used IFRS. The company includes a new shredder warranty...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a three-year warranty...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a three-year warranty against defects, which has a separate purchase price. The company collected $20,000, and $35,000 for this extended warranty feature in the years 2020 and 2021, respectively. The company uses straight-line recognition of warranty revenue. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 44 in the second 12 months following the sale. For simplification, assume that...
Glen Arbor Corporation sells DVD players. The corporation also offers its customers a 4-year service- type warranty contract. On 1/1/17, Glen Arbor sold 20,000 warranty contracts at $99 each and spent $180,000 servicing warranties during 2017 and $200,000 servicing warranties in 2018. Estimated warranty expense for the four-year period is $800,000. The Sales Warranty (Deferred Revenue) approach is applicable. Assume straight-line amortization. What is the Unearned Warranty Revenue balance at 12/31/18? Select one: a. $1,485,000 b. $990,000 c. $1,600,000 d....
Recording Assurance-Type Warranty Liability Finisher Inc. sells merchandise for $450,000 in 2020 that includes a three-year limited warranty, Warranty costs are estimated to be 19 of sales. The company incurred actual costs of $1,440 in 2020 related to the warranties. a. Record the warranty accrual at the time of sale in 2020. b. Record the adjustment to the warranty accrual for actual warranty costs in 2020. Account Name Cr. . 0 0 D 0 b. 0 0 E pepe cen...
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...
TB Construction Ltd. sold on account units of its product with a one-year assurance warranty guarantee. These sales occurred on November 30, 2021. In addition, the company sold on account service-type warranties related to the some of the units for a three-year period beyond the one-year assurance period. By the company's year end, November 30, 2021, no warranty costs were incurred. Other information pertaining to these sales follows: Number of units of product sold Selling price per unit Cost of...
Exercise 13-21 Bridgeport Equipment Limited sold 490 Rollomatics on account during 2017 for $5,700 each. During 2017, Bridgeport spent $34,800 servicing the two-year warranties that are included in each sale of the Rollomatic. All servicing transactions were paid in cash Prepare the 2017 entries for Bridgeport using the assurance-type (expense-based) approach for warranties. Assume that Bridgeport estimates that the total cost of servicing the warranties will be $117,000 for two years. (Credit account titles are automatically indented when the amount...
Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a three-year warranty against defects, which has a separate purchase price. The company collected $20,000, and $35,000 for this extended warranty feature in the years 2020 and 2021, respectively. The company uses straight-line recognition of warranty revenue. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 44 in the second 12 months following the sale. For simplification, assume that...
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