Villa company estimates its annual warranty expense at 8% of net sales. The following data relate to calendar year 2019: Net sales ? Warranty liability, Dec. 31, 2019 Before adjustment 100,000 debit After adjustment 540,000 credit What is the amount of net sales?

Villa company estimates its annual warranty expense at 8% of net sales. The following data relate to calendar year 2019: Net sales ? Warranty liability, Dec. 31, 2019 Before adjustment 100,000 debit After adjustment 540,000 credit What is the amount of net sales?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 12Q: A companys sales for January are $250,000. If the company projects warranty obligations to be 5% of...

See similar textbooks

Related questions

Q: In 2020, KD Corporation began selling a new line of products that carry a two-year warranty against…

A: Warranty is a form of assurance given by the seller to the buyer that in case any defect came out in…

Q: A new product introduced by Beauty Promotions carries a two-year warranty against defects. The…

A: The warranty liability is the expense due as per estimation but not demanded by customer yet.

Q: At the end of 2020, the business has a notes payable with maturity value of TL60.000. The maturity…

A: Discount on notes payable = Maturity value x rate of discount x no of months/12 = TL 60000 X 20% X…

Q: • Allan Company had sales of $1,500,000 during 2021. Actual warranty costs during 2021 were $60,000.…

A: A warranty is a written guarantee that is given by the seller to the buyer for the product against…

Q: Sam company started business in 2020. It sells printers with a three-year warranty. Sam company…

A: Part (1) Amount should Sam Company report as warranty expense in 2020 Sales (units) = 7500 Selling…

Q: Carpet Company had a balance of P800,000 in the warranty liability account on December 31, 2020. The…

A: Given: Warranty balance = P800,000 Warranty expenditure = P2,500,000 Sales = P40,000,000 Warranty…

Q: Bull has a one-year product warranty on selected items in its product line. The estimated warranty…

A: Estimated warranty liability 2021 = P 416000 Warranty claims honored 2021 = P 416000 Estimated…

Q: sparkling water inc. had a total sales of 3,000,000 for 2019. this amount includes 150,000 relating…

A: Net sales = total sales - sales of extended service-type warranty = 3000000 - 150000 = 2,850,000

Q: Soundgarden Company sold 200 color laser copiers on July 10, 2020, for $4,000 apiece, together with…

A: Definition: Warranty expense: It is an estimated expense which arises when the company sells the…

Q: Siomai Company estimates its annual warranty expense as 2% of annual net sales. The following data…

A: 1. Warranty Expense = 2% of Net sales Net sales = 3,200,000 Warranty expense = 3,200,000 x 2% =…

Q: What is the warranty expense for 2020? What is the warranty expense for 2021? What is the warranty…

A: Given information is: In 2020, Pluto Company started selling new computer that carried a 2-year…

Q: Veneer Company started selling a new product that carried a two-year warranty against defect. Based…

A: Estimated warranty liability refers to the liability account which reflects the desired value of…

Q: Best Appliance Store offers a two-year warranty on all appliances sold. The company estimates that…

A: The warranty Expenseis the estimated expense to be made for the sales made during the period.

Q: Raya Company offers a 3-year warranty on its products. Raya estimated warranty costs to be 5% of…

A: The warranty Expenses are estimated on the basis of sales revenue earned during the period.

Q: Blue Inc. has a year-end of June 30. On December 1, 2020, the company signed a 10-month, 5% note…

A: Interest income for 7 months i.e. from Dec 1, 2020 to June 30 = 28,000 x 5% x 7/12…

Q: During 2019, Angel Co. introduced a new line of appliances that carry a three-year warranty against…

A: Answer - A warranty liability is a liability account in which a company records the amount of the…

Q: B8 Inc's sales during 2021 totaled $375,000, and the company estimates that warranty costs will be…

A: Journal etries Warranty Expense A/c Dr. $ 16500 ($375000 x 4.4%) Warranty Payable A/c Cr.…

Q: Relay Company estimated that annual warranty expense at 2% of annual net sales. The net sales for…

A: Introduction: Warranty is a contingent liability that the organization records in its books of…

Q: During 2021, Eaton Co. introduced a new product carrying a two-year warranty against defects. The…

A: The liabilities are the amount due to be paid in near future. The warranty Expenses are estimated…

Q: ABC Company started its business in 2019. It sells an equipment with a 3- year warranty. ABC…

A: Warranty expense can be define as an expense for a company which is offered by the company to their…

Q: Siomai Company estimates its annual warranty expense as 2% of annual net sales. The following data…

A: Warranty expense during the year = Net sales x estimated % of warranty expense

Q: Green Company started business in 2020. It sells printers with a three-year warranty. Green…

A: Warranty expense is the total warranty claim for product =2%+4%+6% =12%

Q: Searches Company sells merchandise with a one year warranty. In 2022, sales consisted of 2,500…

A: Warranty expense recognized in a particular year is calculated on the basis of expected number of…

Q: ABC Company started its business in 2019. It sells an equipment with a 3- year warranty. ABC…

A: Warranty Liability as on December 31,2020 = Total Warranty Expense till 2020 - Actual Warranty…

Q: Ajam Inc. shows the following selected adjusted account balances at March 31, 2019: $ 58,000…

A: Ajam Inc. Balance Sheet March'31, 2019 Liabilities Current Liabilities: Accounts…

Q: On September 1, 2019, Carolina Electronics Company has 1,150 Blu-ray players ready for sale. On…

A: Journal entry is a primary entry that records the financial transactions initially.

Q: PHAGE COMPANY estimates its annual warranty expense at 4% of net sales. The following balances are…

A: Estimated warranty expenses = sales x 4% = 1500000 x 4% = 60,000

Q: In connection with this note, how much Jane Co. would pay at March 31, 2019?

A: Given information is: Jane's Donut Co. borrowed OMR 50,000 on March 1, 2018, and signed a one-year…

Q: On January 1, 2019, Love Co. sold merchandise to Kit Store in exchange for a non-interest bearing…

A: Value of notes receivable as of January 1, 2019 = Annual payment x PVIAF (8%, 10 years) = P100,000 x…

Q: Charm Company estimates its annual warranty expense as 2% of annual net sales. The following data…

A: Solution: Warranty expense for 2019 = Net Sales * 2% Net sales - P3,200,000 Warranty expense for…

Q: 2. During 2020, Joaquin Company introduced a new line of machines that carry a two-year warranty…

A: Year 2020 Estimated warranty expenses and liability= Year of sale= P1000000*1%= P10000 Year after…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Given information, Sales in 2019 =7,500 units Selling price =P 5,000 Warranty cost per percentage =…

Q: In 2019, Caramel Corporation began selling a new line of products that carry a two-year warranty…

A: Warranty liability: When a firm incurs warranty liabilities, it records the amount of repair or…

Q: During 2019, Genesis Co. introduced a new line of machines that carry a three-year warranty against…

A: The question requires liability to be reported on December 31 , 2021 Warranty liability = Warranty…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: The balance sheet or the statement of financial position shows the financial position of the company…

Q: Best Appliance Store offers a two-year warranty on all appliances sold. The company estimates that…

A: Formula: Sales revenue = Sales units x Sales price per unit

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Warranty means where the company is undertaking to make good the loss which has been incurred due to…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Liability for warranty is calculated as a percentage of the estimated amount of sales to be made by…

Q: Casio Co. sells calculators that carry a one- year warranty against manufacturer's defects. Based on…

A: Total Warranty expense = No. of calculators sold x warranty costs per calculator

Q: Lindy Appliance begins operations in 2021 and offers a one-year warranty on all products sold. Total…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: In 2019, Shiftry Corporation began selling a new line of products that carry a two-year warranty…

A: The warranty expenses are estimated in the basis of past year expenses related to expenditures…

Q: During 2019, Bonita Industries introduced a new line of machines that carry a three-year warranty…

A: The amount that is expected to be incurred for replacement or damage of goods is considered as…

Q: On May 1, 2021, Nees Manufacturing lends $10,000 to Roberson Supply using a 9% note due in 12…

A: Interest revenue = Amount of notes x rate of interest x period May 1, 2021 to December 31,2021 = 8…

Q: Prepare all appropriate journal entries including the sale of merchandise.

A: Journal entry: Journal entry is the book of original entry where first transactions are recorded in…

Q: ABC Corporation started its business in 2019. It sells printers with a 3-year warranty. ABC…

A: Warranty means where the company is undertaking to make good the loss which has been incurred due to…

Q: In 2018, Carver Electronics Co. began selling a new computer that carried a two-year warranty…

A: Warranty Liability In general term warranty is provided by the company to the customer for their…

Q: ABC Company started its business in 2019. It sells an equipment with a 3- year warranty. ABC…

A: Warranty Liability as on Dec 31,2020 = Total Warranty Expenditure recognized - Actual Warranty…

Q: A new product introduced by Reyes Promotions carries a two-year warranty against defects. The…

A: A warranty is like some kind of guarantee that a company is giving when customers buy the product. A…

Question

Villa company estimates its annual warranty expense at 8% of net sales. The following data relate to calendar year 2019:

Net sales ?

Warranty liability, Dec. 31, 2019

Before adjustment 100,000 debit

After adjustment 540,000 credit

What is the amount of net sales?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?
A companys sales for January are $250,000. If the company projects warranty obligations to be 5% of sales, what is the warranty liability amount for January?
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.)
Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts receivable balance of $844,260, and an ending accounts receivable balance of $604,930. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Starlight Enterprises if the industry average is 1.5 times and the number of days sales ratio is 175 days?
Anderson Air is a customer of Handler Cleaning Operations. For Anderson Airs latest purchase on January 1, 2018, Handler Cleaning Operations issues a note with a principal amount of $1,255,000, 6% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Handler Cleaning Operations for the following transactions. A. Entry for note issuance B. Subsequent interest entry on December 31, 2018 C. Honored note entry at maturity on December 31, 2019
Arvan Patel is a customer of Banks Hardware Store. For Mr. Patels latest purchase on January 1, 2018, Banks Hardware issues a note with a principal amount of $480,000, 13% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Banks Hardware Store for the following transactions. A. Note issuance B. Subsequent interest entry on December 31, 2018 C. Honored note entry at maturity on December 31, 2019.
On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
Notes Payable and Effective Interest On November 1,2019, Edwin Inc. borrowed cash and signed a 60,000, 1-year note payable. Required: Compute the following items assuming (a) an interest-bearing note at 12%, (b) a non-interest-bearing note discounted at 12%: cash received effective interest rate interest expense for 2019 Prepare the journal entries for Edwin under each case for 2019 and 2020. Next Level Why is the effective rate higher for the non-interest-bearing note?
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase, and 5% in the second month following the purchase. What are the cash payments if it made the following purchases in 2018?
Non-Interest-Bearing Notes Payable On November 16, 2019, Clear Glass Company borrowed 20,000 from First American Bank by issuing a 90-day, non-interest-bearing note. The bank discounted this note at 12% and remitted the difference to Clear Glass. Required: 1. Prepare the journal entries of Clear Glass to record the preceding information, the related calendar year-end adjusting entry, and payment of the note at maturity. 2. Show how the preceding items Would be reported on the December 31, 2019, balance sheet. 3. Next Level What is Clear Glass Companys effective interest rate?