Homework Answers
a) Warranty expense $4,500 (Debit)
Warranty Liability $4,500 (Credit)
($450,000 * 1% = $4,500)
(Warranty expense recognised against warranty liabilty as per matching principal)
b) Warranty Liability $1,440 (Debit)
Cash and Payables $1,440 (Credit)
(Actual warranty costs realised against warranty liabilty)
It has been assumed that warranty costs has been paid in the form of cash.
I hope I've solved to the point. Please feel free to ask any queries and do give a thumbsup if the solution was satisfactory. Thankyou.
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Purple Graph
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Actual warranty claim: $12,122 (4 years ago)
Orange Graph
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We are hired as consultants to assist Arctica Co. in accounting
for its warranty expenses. Arctica offers a one-year warranty
covering parts on each snowmobile it sells. The following Tableau
Dashboard is provided to assist us.
Estimated Warranty Expense vs. Actual Warranty Claims
Purple Graph
Actual warranty claim: $17,660 (1 year ago)
Actual warranty claim: $21,660 (2 years ago)
Actual warranty claim: $13,070 (3 years ago)
Actual warranty claim: $12,122 (4 years ago)
Orange Graph
Estimated warranty expense: $14,800 (1...
Marin Inc. sells portable computer equipment with a two-year warranty contract that requires the corporation to replace defective parts and provide the necessary repair labour. During 2020, the corporation sells for cash 382 computers at a unit price of $2,380. Ignore any cost of goods sold. Based on experience, the two-year warranty costs are estimated to be $157 for parts and $190 for labour per unit. (For simplicity, assume that all sales occurred on December 31, 2020) The warranty is...
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warranty contract that requires the corporation to replace
defective parts and provide the necessary repair labour. During
2020, the corporation sells for cash 380 computers at a unit price
of $2,550. Ignore any cost of goods sold. Based on experience, the
two-year warranty costs are estimated to be $166 for parts and $189
for labour per unit. (For simplicity, assume that all sales
occurred on December 31, 2020.) The warranty is...
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