Davao Company prepares quarterly interim financial reports. The entity sells electrical goods and normally 5% of customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to P10,000,000. However, in the second quarter, a design fault was found and warranty claims were expected to be 10%o for the whole year. Sales for the second quarter amounted to P15,000,000. What amount of provision should be charged in the second quarter's interim income statement?
Davao Company prepares quarterly interim financial reports. The entity sells electrical goods and normally 5% of customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to P10,000,000. However, in the second quarter, a design fault was found and warranty claims were expected to be 10%o for the whole year. Sales for the second quarter amounted to P15,000,000. What amount of provision should be charged in the second quarter's interim income statement?
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 24Q: Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms...
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Davao Company prepares quarterly interim financial reports. The entity sells electrical goods and normally 5% of customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to P10,000,000. However, in the second quarter, a design fault was found and warranty claims were expected to be 10%o for the whole year. Sales for the second quarter amounted to P15,000,000. What amount of provision should be charged in the second quarter's interim income statement?
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