Pinnacle Co., prepares quarterly interim financial reports. The entity sells electric fans and normally 5% of their customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to 20,000,000. However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the whole year. Sales for the second quarter amounted to P30,000,000. What amount of provision should be charged in the interim income statement for the first quarter? A. 2,500,000 B. 3,750,000 C. 1,500,000 D. 1,000,000
Pinnacle Co., prepares quarterly interim financial reports. The entity sells electric fans and normally 5% of their customers claim on their warranty. The provision in the first quarter was calculated at 5% of sales to date which amounted to 20,000,000. However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the whole year. Sales for the second quarter amounted to P30,000,000. What amount of provision should be charged in the interim income statement for the first quarter? A. 2,500,000 B. 3,750,000 C. 1,500,000 D. 1,000,000
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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Pinnacle Co., prepares quarterly interim financial reports. The entity sells electric fans and normally 5% of their customers claim on their warranty.
The provision in the first quarter was calculated at 5% of sales to date which amounted to 20,000,000.
However, in the second quarter, a design fault was found and warranty claims were expected to be 10% for the whole year. Sales for the second quarter amounted to P30,000,000.
What amount of provision should be charged in the interim income statement for the first quarter?
A. 2,500,000
B. 3,750,000
C. 1,500,000
D. 1,000,000
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