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Problem 3-13 (AICPA Adapted) On April 1, 2020, Ash Company began offering a new product for sale under a one-year warranty. Of the 50,000 units in inventory at April 1, 2020, 30,000 had been sold by June 30, 2020. Based on experience with similar products, the entity estimated that the average warranty cost per unit sold would be P80. Actual warranty costs incurred from April 1 through June 30, 2020 totaled P700,000. 1. What is the warranty expense for 2020? a. 2,400,000 b. 4,000,000 c. 2,000,000 d. 1,200,000 2. On June 30, 2020, what amount should be reported as estimated warranty liability? a. 1,600,000 b. 3,300,000 c. 1,700,000 d. 900,000

Problem 3-13 (AICPA Adapted) On April 1, 2020, Ash Company began offering a new product for sale under a one-year warranty. Of the 50,000 units in inventory at April 1, 2020, 30,000 had been sold by June 30, 2020. Based on experience with similar products, the entity estimated that the average warranty cost per unit sold would be P80. Actual warranty costs incurred from April 1 through June 30, 2020 totaled P700,000. 1. What is the warranty expense for 2020? a. 2,400,000 b. 4,000,000 c. 2,000,000 d. 1,200,000 2. On June 30, 2020, what amount should be reported as estimated warranty liability? a. 1,600,000 b. 3,300,000 c. 1,700,000 d. 900,000

Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter9: Working Capital
Section: Chapter Questions
Problem 34E
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Problem 3-13 (AICPA Adapted) On April 1, 2020, Ash Company began offering a new product for sale under a one-year warranty. Of the 50,000 units in inventory at April 1, 2020, 30,000 had been sold by June 30, 2020. Based on experience with similar products, the entity estimated that the average warranty cost per unit sold would be P80. Actual warranty costs incurred from April 1 through June 30, 2020 totaled P700,000. 1. What is the warranty expense for 2020? a. 2,400,000 b. 4,000,000 c. 2,000,000 d. 1,200,000 2. On June 30, 2020, what amount should be reported as estimated warranty liability? a. 1,600,000 b. 3,300,000 c. 1,700,000 d. 900,000
Transcribed Image Text:Problem 3-13 (AICPA Adapted) On April 1, 2020, Ash Company began offering a new product for sale under a one-year warranty. Of the 50,000 units in inventory at April 1, 2020, 30,000 had been sold by June 30, 2020. Based on experience with similar products, the entity estimated that the average warranty cost per unit sold would be P80. Actual warranty costs incurred from April 1 through June 30, 2020 totaled P700,000. 1. What is the warranty expense for 2020? a. 2,400,000 b. 4,000,000 c. 2,000,000 d. 1,200,000 2. On June 30, 2020, what amount should be reported as estimated warranty liability? a. 1,600,000 b. 3,300,000 c. 1,700,000 d. 900,000
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