Question

eBook Calcul Chapter 11 Accred Product Warranty 1 EX 11 11 BLANKSHEET ALGO General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows: 2. EX 1101 ALGO (in millions) 3. PR. 11.05. ALGO Year 2 Year 1 4. PE 11.04.BLANKSHEETALGO. 52,78 $2,994 Current estimated product warranty payable Noncurrent estimated product warranty payable 5. PR. 11.04 ALGO 4,002 5.138 Tot 6. EX 11 21 57,500 $8,332 7. EX 11 23 EXCEL ALGO Presume that's sales were $147,049 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million on the 8. PE 1103A a. The distinction between short and long-term is important to creato in order to accurately evaluate the near-term cash demande business relative to the quick current assets and other longer te demands 9. EX 11.05 10. EX110L EXCEL ALGO b. Provide the journal entry for the Year 2 product warranty expense. If an amount box does not require an entry, leave it bank Product Warranty Expense Product Warranty Payable c. What the content must be met in order for a product antybity to be reported the financial Statements > Progress

Answer 1

Computation of Product Warranty expense:

Estimated Product warranty payable-Total at the end

7,590

Add: Paid during the year

3000

Sub total

10,590

Less: Estimated Product Warranty payable-Total in the beginning

8,332

Product warranty expense for the period

2,258

Req a.

The distinction between short and long term liabilities is important to creditors in order to accurately evaluate the near term cash DEMANDS.

on the business relative to quick current assets other longer term DEMAND

Req b.

Journal entry

S.no.

Accounts title and explanations

Debit $

Creedit $

a.

Product Warranty expense

2,258

Product warranty payable

2,258

(for recognizing the expense)

Req c.

1. It must be probable that the warranty expense will arise in the future.

2. And such expense can be reasonably estimated.