Ayayai Corporation manufactures a line of amplifiers that carry
a three-year warranty against defects. Based on experience, the
estimated warranty costs related to dollar sales are as follows:
first year after sale—1% of sales; second year after sale—2% of
sales; and third year after sale—3% of sales. Sales and actual
warranty expenditures for the first three years of business
were:
Estimated warranty cost : | |
Sales ,2018( $750000 X 6%),1%+2℅+3℅ | $45000 |
Sales ,2019($1,000,000 X 6%) | $60000 |
Sales ,2020($1,000,000 X 6%) | $60000 |
Total estimated warranty cost | $165000 |
Less:Total actual warranty expenses ($15900+$46000+$79500) |
$(141400) |
Balance of warranty liability | $23600 |
The liability account has a balance of $23600 on December 31 ,2020 based on the difference between the estimated warranty costs (totaling $165000)for the three years’ sales and the actual warranty expenditures(totaling $141400) during that same period.
Ayayai Corporation manufactures a line of amplifiers that carry a three-year warranty against defects. Based on...
Ayayai Corporation manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale—1% of sales; second year after sale—2% of sales; and third year after sale—3% of sales. Sales and actual warranty expenditures for the first three years of business were: 2018 Sales $750,000 1,000,000 1,000,000 Warranty Expenditures $15.900 46,000 79,500 2019 2020 (a) Calculate the amount that Ayayai Ltd. should...
intermediate accounting 2 Sheffield Corporation manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-19 of sales; second year after sale-2% of sales; and third year after sale-3% of sales. Sales and actual warranty expenditures for the first three years of business were: 2018 2019 2020 Sales $800,000 1,070,000 1,025,000 Warranty Expenditures $16,400 47,000 83,000 (a) Calculate the amount that...
BACK NEXT Exercise 13-20 Bramble Corporation manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-2% of sales; second year after sale-4% of sales; and third year after sale-5% of sales. Sales and actual warranty expenditures for the first three years of business were: 2018 2019 2020 Sales $810,000 1,130,000 1,017,000 Warranty Expenditures $16,500 47,200 86,000 (a) Calculate the amount...
intermediate financial accounting 2 BACK NEXT Exercise 13-20 Sheffield Corporation manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-196 of sales; second year after sale-2% of sales and third year after sale-3% of sales. Sales and actual warranty expenditures for the first three years of business were: 2018 2019 2020 Sales $800,000 1,070,000 1,025,000 Warranty Expenditures $16,400 47,000 83,000...
During 2019, Salton Co. introduced a new line of machines that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 1% of sales in the year of sale, 2% in the year after sale, and 3% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2019 $ 1,400,000 $ 26,000 2020 1,000,000 40,000 2021 1,400,000 90,000 $3,800,000 $156,000 What...
Its line of amplifiers carries a 3-year warranty against defects. On the basis of past experience the estimated warranty costs related to dollar sales are first year after sale—2% of sales revenue; second year after sale—3% of sales revenue; and third year after sale—5% of sales revenue. Sales and actual warranty expenditures for the first 3 years of business were: Sales Revenue Warranty Expenditures 2016 $ 760,900 $ 6,570 2017 1,133,300 18,310 2018 1,191,700 57,790 Liability should be reported on...
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Right Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1% of sales. Sales were $14 million and actual warranty expenditures were $26,500 for the first year of selling the product. What amount (if any) should Right report as a liability at the end of the year? (Enter your answers in whole dollars.) Warranty Liability Beg. Bal. Warranty expense Actual expenditures End...