An entity sells goods with a warranty covering customers for the cost of repairs of any defects that are discovered within the first two months after purchase. Experience suggests that 60% of the goods sold will have no defects, 25% will have minor defects and 15% will have major defects. If minor defects were detected in all products sold the cost of repairs would be OMR 40,000; if major defects were detected in all products sold, the cost would be RO 200,000. What amount of provision should be made? a. OMR 30,000 b. None of the options c. OMR 40,000 d. OMR 35,000
An entity sells goods with a warranty covering customers for the cost of repairs of any defects that are discovered within the first two months after purchase. Experience suggests that 60% of the goods sold will have no defects, 25% will have minor defects and 15% will have major defects. If minor defects were detected in all products sold the cost of repairs would be OMR 40,000; if major defects were detected in all products sold, the cost would be RO 200,000. What amount of provision should be made? a. OMR 30,000 b. None of the options c. OMR 40,000 d. OMR 35,000
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 9MC: Blake Department Store sells television sets with one-year warranties that cover repair and...
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An entity sells goods with a warranty covering customers for the cost of repairs of any defects that are discovered within the first two months after purchase. Experience suggests that 60% of the goods sold will have no defects, 25% will have minor defects and 15% will have major defects. If minor defects were detected in all products sold the cost of repairs would be OMR 40,000; if major defects were detected in all products sold, the cost would be RO 200,000. What amount of provision should be made?
a.
OMR 30,000
b.
None of the options
c.
OMR 40,000
d.
OMR 35,000
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