e amount of warranty expense-
Q: Briefly explain off-balance-sheet assets and off-balance-sheet liabilities with an appropriate…
A: Off-balance-sheet items seem to be those items that do not show up on a company's balance sheet.…
Q: Explain the accounting for an assurance-type warranty
A:
Q: What is meant by contingent Liability? How is it shown in final accounts?
A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…
Q: Why are warranty liabilities usually recognized on the balance sheet as liabilities even when they…
A: A warranty liability is a liability account that reports the estimated amount that a company will…
Q: Which of the following is most likely to be regarded as an estimated liability that is subject to…
A: Solution Concept Estimated liability that is subject to provision It means that the amount…
Q: Which of the following is an accrued liability? * Unearned subscriptions revenue Current portion of…
A: Liabilities that are recorded in the balance sheet are of two types they are - Current liabilities.…
Q: Explain the accounting for a service-type warranty.
A: Warranty: Warranty can be defined as a promissory document which is given by the manufacturer to…
Q: Which of the following would be considered a long-term liability? a. interest payable b.…
A: Analysis of options a. interest payable Since interest will be paid within 12 months or normal cycle…
Q: The adjustment will increase the warranty expense, if the actual cost of warranty exceeds the…
A: Answer: Warranty is the promise that is made by business on any product that is being sold.
Q: The amortization of premium on notes receivable is a. deduction from accrued interest receivable b.…
A: The bonds are issued at premium when market rate is lower than the coupon rate of bonds.
Q: 1. The discounting of note receivable is accounted for as a secured borrowing. 2. The discounting of…
A: Note receivables: Note receivables can be defined as the written promise made by the borrower to…
Q: An installment note is a liability requiring a series of payments to the lender. True or False True…
A: Introduction: An instalment note is a legal obligation or liability that requires the lender to…
Q: The discount allowed to a debtor for early payment is
A: Debtors :- Debtors are the person to whom goods and services are sold on credit.
Q: 2. Which of the following best describes the accounting for assurance-type warranty costs?
A: An assurance-type warranty provides an assurance to repair or replace the defective product.
Q: Distinguish between the accounting treatment of a manufacturer’s warranty and an extended warranty.…
A: WarrantyWarranty is assurance provided to a customer by a seller. It is provided against the…
Q: Which of the following is not a liability?a. Income taxes payableb. Accrued warranties payablec.…
A: Liability are the obligations which are to be paid in current period or in future.
Q: Must obligations be known contractual debts in order to be reported as liabilities?
A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…
Q: hich of the following best describes the accounting for assurance-type warranty costs?
A: Since an assurance-type warranty guarantees the functionality of a product, the warranty is not…
Q: Define Accrued Interest Payable.
A:
Q: A typical provision is: a. bonds payable. b. cash. c. a warranty liability. d. accounts…
A: Provision: An economic obligation created and maintained to cover the future liability is termed as…
Q: Define the term warranty expense.
A:
Q: Rebate on bills discounted is A liability Actual income Income received in advance An accrued income
A: Statement of financial position or balance sheet is one of a financial statement which helps…
Q: If problem is silent as to the terms of a Warranty Payable, will it be presented in the current…
A: Warranty Payable:-It is a liability for the company which means the company has to pay for repair…
Q: True or false Simple interest is calculated on the principal and any accrued interest
A: Interest: Interest is the cost of borrowing money-, in other words Interest is the amount charged…
Q: What makes product warranties considered as contingent liabilities? Also, what Generally Accepted…
A: Contingent Liability is a liabilty that may arise in outcome of future uncertain amount.
Q: estimated warranty liability
A: Estimated warranty liability = Sales * Estimated percentage of warranty
Q: Define what is an off-balance sheet activity? Also provide example of an off-balance sheet an…
A: Off-Balance sheet Activity means the assets or liabilities which are not reflected in the balance…
Q: Give the examples of Accrued liabilities.
A: Accrued liabilities: The accrued liabilities means that the amount will be paid in the future…
Q: Through financial reporting perspective, what are the liability three essential characteristics…
A: Liabilities: Liabilities are referred to as the obligation of the business towards the creditors…
Q: Describe how the matching principle applies to contingent liabilities (hint: warranties).
A: Introduction:- Contingent liability may or may not occurred in the future. Matching principles…
Q: Example of liabilities include notes payable and taxes payable True False
A: Liabilities refer to the amount that is payable to the outside entity by the company as a result of…
Q: Warranty liability is an estimate based on past warranty claims. How might a company determine how…
A: Warranty Liability MEANING : A warranty is a guarantee that a company will replace or fix a…
Q: RUE OR FALSE? The effect of a lender agreeing to give the borrowing entity a grace period after the…
A: Current liabilities: Current liabilities are the obligations that are to be met within a year or 12…
Q: Choose an example of non-current liability. O a. Interest payable O b. Bonds payable Oc. Wages…
A: Following is the answer to the given question
Q: What is the gain on extinguishment of the note payable?
A: option b is the answer.
Q: interest expense, which of the following * ?occurs firs Incurring The Interest Expense C Paying The…
A: Accrued interest expense implies interest expense that has been incurred but not yet paid. It is a…
Q: Which of the following is not a liability?
A: Liabilities: Liabilities are referred to as the obligation of the business towards the creditors…
Q: On the balance sheet, liabilities are generally classified as O legal or nonlegal. probable or…
A: The balance sheet shows the financial position of the business. It consists of liabilities and…
Q: What accounts are used to record a contingent warranty liability that is probable and estimable…
A: Warranty is a form of assurance being provided by the seller to the buyer that if there will be any…
This lesson is under non-financial liabilities.
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- Blake Department Store sells television sets with one-year warranties that cover repair and replacement of television parts. In the month of June, Blake sells forty television sets with a per unit cost of $500. If Blake estimates warranty fulfillment at 10% of sales, what would be the warranty liability reported in June? A. $1,000 B. $2,000 C. $500 D. $20,000Barkers Baked Goods purchases dog treats from a supplier on February 2 at a quantity of 6,000 treats at $1 per treat. Terms of the purchase are 2/10, n/30. Barkers pays half the amount due in cash on February 28 but cannot pay the remaining balance due in four days. The supplier renegotiates the terms on March 4 and allows Barkers to convert its purchase payment into a short-term note, with an annual interest rate of 6%, payable in 9 months. Show the entries for the initial purchase, the partial payment, and the conversion.Element Surfboards issued a $210,800 note on January 1, 2018 to a customer, Leona Marland, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 10.2% annual interest rate. Leona Marland does not pay on her account and dishonors the note. On December 2, 2018, Element Surfboards decides to sell the dishonored note to a collection agency for 30% of its value. Record the journal entries for Element Surfboards for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on October 1, 2018 C. Receivable sale on December 2, 2018
- In 20X1, Stevens Corp. began a new product line of wearable technology that carries a 24-month warranty against manufacturer defects. Based on industry experience, Stevens expects warranty costs to be an amount equal to approximately 9% of total sales dollars. During 20X1, new sales of this technology totaled $3,000,000. The costs incurred to satisfy warranty claims in 20X1 was $90,000. Required: Answer the following two questions. Question #1: What should Stevens report as the "Warranty Expense" balance on its 20X1 income statement?Answer: Question #2: What should Stevens report as the "Warranty Liability" balance on its balance sheet at 12/31/X1?AnswerChato Company sells electrical goods covered by a one-year warranty for any defects. Of the sales of P70,000,000 for the year, the entity estimates that 3% will have major defect, 5% will have minor defect and 92% will have no defect. The cost of repairs would be P5,000,000 if all the products sold had major defect andP3,000,000 if all had minor defect. What amount should be recognized as a warranty provision? a. 8,000,000 b. 5,600,000 c. 300,000 d. 190,000In 2013, BMJ Plumbing Company sold 250 water heaters for $1,050 each. The water heaters carry a 5-year warranty for repairs. BMJ Plumbing estimates that repair costs will average 2% of the total selling price. Required: 1. How much is recorded in the warranty liability account as a result of selling the water heaters during 2013, assuming no warranty service has yet been performed?$ Hide 2. Prepare the necessary adjusting entry at December 31, 2013. Dec. 31 (Record warranty expense)
- East Corp. manufactures stereo systems that carry a two-year warranty against defects. Based on past experience, warranty costs are estimated at 4% of sales for the warranty period. During 2005, stereo system sales totaled $3,000,000, and warranty costs of $67,500 were incurred.In its income statement for the year ended December 31, 2005, East should report warranty expense of: $120,000 $52,500 $60,000 $67,500Excom sells radios and each unit carries a two-year replacement warranty. The cost of repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 157 radios for $53 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense? a.$26 b.$53 c.$416 d.$4,082During the current year, Gardner Home Center sold 800 power washers for $350 each. The power washers carry a 2-year warranty for repairs. Estimates indicate that repair costs will average 2% of sales. How much warranty expense should be accrued at the end of the current year as a result of the sales of this product? a.$8,400 b.$5,600 c.$2,800 d.No liability should be recorded until units are brought in for repairs.
- Chato Company sells electrical goods covered by a one – year warranty for any defects. Of the salesof P70,000,000 for the year, the entity estimated that 3% will have major defects, 5% will have aminor defect and 92% will have no defect. The cost of repairs would be P5,000,000 if all theproducts sold had major defect and P3,000,000 if all had minor defect.What amount should be recognized as a warranty provision?Cuyos, Inc., a dealer of household appliances, sells washing machines at an average price of P8,100. Thecompany also offers each customer a separate 3-year warranty contract for P810 that requires the company toprovide periodic maintenance services and replace defective parts.During 20x1, Cuyos sold 300 washing machines and 270 warranty contracts for cash. The company estimatesthat the warranty costs are P180 for parts and P360 for labor.Assume sales occurred on December 31, 20x1. Cuyos’ policy is to recognize income from the warranties on astraight-line basis. In 20x2, Cuyos incurred actual costs relative to 20x1 warranty sales of P18,000 for parts andP36,000 for labor.Required:1. What amount of current liability relative to the transactions above should be reported on the December31, 20x1 statement of financial position? ___________2. What amount of warranty expense would be shown in the income statement for the year endedDecember 31, 20x2? __________3. What amount of current…Haeir Co. sells washing machines that carry a three-year warranty against manufacturer's defects. Based on the entity's experience, warranty costs are estimated at P 300 per machine. During the current year, the entity sold 2,400 washing machines and paid warranty costs of P 170,000. What amount should be reported as warranty expense for the years? What amount should be reported as warranty liability at year-end? respectively * A.P 720,000 and P 170,000 B.P 170,000 and P 720,000 C.P 240,000 and P 550,000 D.P 720,000 and P 550,000