81PROBLEMSProblem 3-1 (IAA)repair warranty The sale price for each set is P15,000. Theaverage repair cost per set is P800.Research has shown that 20% of all sets sold are repaired inthế first year and 40% in the second year.20202021300500150,000Number of sets sold40,000Total payments'for warranty repairsRequired:1. Prepare journal entries in connection with the warrantyusing the "expense as incurred" approach.2. Prepare journał entries in connection with the warrantyusing the "accrual" approach.3. Determiņe the estimated warranty liability on December31, 20214. Analyze the estimated warranty liability account toascertain whether actual warranty costs approximate theestimate. The sales and warrantý repairs are made evenlyduring the year.5. Prepare journal entry to correct the estimated warrantyliability on December 31, 2021.82Problem 3-2 (AICPA Adapted)In 2020, Dare Company bęgan selling

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Socorro Company sells color television sets with a two-year repair warranty The sale price for each set is P15,000. The average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in the first year and 40% in the second year. 2020 2021 500 150,000 300 Number of sets sold 40,000 Total payments'for warranty repairs Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journal entries in connection with the warranty using the "accrual" approach. 3. Determine the estimated warranty liability on December 31, 2021 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.

Socorro Company sells color television sets with a two-year repair warranty The sale price for each set is P15,000. The average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in the first year and 40% in the second year. 2020 2021 500 150,000 300 Number of sets sold 40,000 Total payments'for warranty repairs Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journal entries in connection with the warranty using the "accrual" approach. 3. Determine the estimated warranty liability on December 31, 2021 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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