Pinnacle Company prepares quarterly interim financial reports. The entity sells electrical appliances and normally 5% of the 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% for the whole year. Sales for the second quarter amounted to P15,000,000. What amount should be reported as warranty expense in the interim income statement for the second quarter? A. 2000000 B. 1250000 C. 1500000 D. 750000
Pinnacle Company prepares quarterly interim financial reports. The entity sells electrical appliances and normally 5% of the 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% for the whole year. Sales for the second quarter amounted to P15,000,000. What amount should be reported as warranty expense in the interim income statement for the second quarter? A. 2000000 B. 1250000 C. 1500000 D. 750000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 3RE: Cee Co.s fiscal year begins April 1. At the beginning of its fiscal year, Cee Co. estimates that...
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Pinnacle Company prepares quarterly interim financial reports. The entity sells electrical appliances and normally 5% of the 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% for the whole year. Sales for the second quarter amounted to P15,000,000. What amount should be reported as warranty expense in the interim income statement for the second quarter?
A. 2000000
B. 1250000
C. 1500000
D. 750000
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