In 2020, Dubious Company began selling new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the entity estimated Warranty costs as a percentage of peso sales. First year of warranty Second year of warranty 2% 5% 2020 2021 Sales Actual warranty cost 5,000,000 100,000 7,000,000 300,000
In 2020, Dubious Company began selling new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the entity estimated Warranty costs as a percentage of peso sales. First year of warranty Second year of warranty 2% 5% 2020 2021 Sales Actual warranty cost 5,000,000 100,000 7,000,000 300,000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 57BE
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3. What is the warranty expense for 2021?
4. What is the warranty liability on December 31, 2021?
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