Problem 3-4 (IAA)Sony Company sells stereos under a 2-year warranty contractthat requires the entity to replace defective parts andprovide free labor on all repairs.During 2019, 1,000 units wère sold at P9,000 each.In 2020, the entity sold an additional 900 units at P9,250each.Sales occurred on the last day of the year for both 2019 and2020.Based on past experience, the estimated 2-year warrantýcosts are P200 for parts and P250 for labor per unit.It is also estimated that 40% of the warranty expenditureswill occur in the first year and 60% in the second year.Actual warranty expenditures were:20202021280,000190,000Stereos sold in 2019180,000Stereos sold in 2020Required:1. Prepare journal entries for 2019, 2020 and 2021.2. Analyze the estimated warranty liability account to provethe reasonable accuracy of the balance on December 31,2021.3. Prepare the adjustment of the eştimated warrantyliability on December 31, 2021.

Warranty Expenses Most of the companies which are providing the warranty service to their product to…

Answered: Required: 1. Prepare journal entries…

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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Unearned Revenue Jennifers Landscaping Services signed a $400-per-month contract on November 1, 2019, to provide plant watering services for Lola Inc.s office buildings. Jennifers received 4 months' service fees in advance on signing the contract. Required: 1. Prepare Jennifers journal entry to record the cash receipt for the first 4 months. 2. Prepare Jennifers adjusting entry at December 31, 2019. 3. CONCEPTUAL CONNECTION How would the advance payment (account(s) and amounts(s)] be reported in Jennifers December 31, 2019, balance sheet? How would the advance payment [account(s) and amount(s)] be reported in Lolas December 31, 2019, balance sheet?
Service Revenue Softball Magazine Company received advance payments of $75,000 from customers during 2019. At December 31, 2019, $20,000 of the advance payments still had not been earned. Required: After the adjustments are recorded and posted at December 31, 2019, calculate what the balances will be in the Unearned Magazine Revenue and Magazine Revenue accounts. Use the following information for Cornerstone Exercises 5-23 and 5-24: Bolton sold a customer service contract with a price of S37 000 to Sammys Wholesale Company. Bolton offered terms of 1/10, n/30 and expects Sammy to pay within the discount period.
Reporting Liabilities Morton Electronics had the following obligations: a. A legally enforceable claim against the business to be paid in 3 months. b. A guarantee given by a seller to a purchaser to repair or replace defective goods during the first 6 months following a sale. c. An amount payable to Bank One in 10 years. d. An amount to be paid next year to Citibank on a long-term note payable. Required: CONCEPTIJAL CONNECTION Describe how each of these items should be reported in the balance sheet.
Mystic Pizza Company purchases a franchise from NY Pizzeria Inc. for 96,000 on June 1, 2019. The franchise will last 8 years. Record Mystic Pizzas purchase of the franchise on June 1 and adjusting entry at the end of 2019.
Accrued Interest On May 1, the Garnett Corporation wanted to purchase a $200,000 piece of equipment, but Garnett was only able to furnish $75,000 of its own cash to purchase the equipment. Garnett borrowed the remainder of the $200,000 from the Peoples National Bank on a 3-year, 4% note. Required: If the company keeps its records on a calendar year, what adjusting entry should Garnett make on December 31?
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to Mark Company. Mark signed a 180,000 non-interest-bearing note, payable in three 60,000 annual installments on December 31, 2019, 2020, and 2021. The fair value of the machinery was 149,211.12 on the date of sale. The machinery had been purchased by Lisa at a cost of 160,000. Required: 1. Prepare all the journal entries on Lisas books for January 1, 2019, through December 31, 2021. 2. Prepare the notes receivable portion of Lisas balance sheet on December 31, 2019 and 2020.

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Required: 1. Prepare journal entries for 2019, 2020 and 2021. 2. Analyze the estimated warranty liability account to prove the reasonable accuracy of the balance on December 31, 2021. 3. Prepare the adjustment of the eştimated warranty liability on December 31, 2021.