Cloudrain Co gives a one-year warranty with all products and the rate of returns under warranty is 12%. 5% of the returned items can be repaired at a cost of €5 (free of charge to the customer). The other 95% are scrapped and a full refund of €30 is given. Cloudrain Co sold 525,000 units during the year to 31 December 2020. What is the amount of the warranty provision that should be created at 31 December 2020? €1,890,000 €1,811,250 €1,795,500

Cloudrain Co gives a one-year warranty with all products and the rate of returns under warranty is 12%. 5% of the returned items can be repaired at a cost of €5 (free of charge to the customer). The other 95% are scrapped and a full refund of €30 is given. Cloudrain Co sold 525,000 units during the year to 31 December 2020. What is the amount of the warranty provision that should be created at 31 December 2020? €1,890,000 €1,811,250 €1,795,500

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.5P

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