Answered: Lachgar Industries disclosed estimated… | bartleby

Lachgar Industries disclosed estimated product warranty payable for comparative years as follows: ( in millions) Year 2 Year 1 Current estimated product warranty payable $11,272 $10,808 Noncurrent estimated product warranty payable 6,856 6,043 Total $18,128 $16,851 Presume that Lachgar’s sales were $146,889 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $11,621 million. a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash on the business relative to the quick current assets and other longer-term . b. Provide the journal entry for the Year 2 product warranty expense. c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

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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Accrued Product Warranty

Lachgar Industries disclosed estimated product warranty payable for comparative years as follows:

	( in millions)
	Year 2	Year 1
Current estimated product warranty payable	$11,272		$10,808
Noncurrent estimated product warranty payable	6,856		6,043
Total	$18,128		$16,851

Presume that Lachgar’s sales were $146,889 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $11,621 million.

a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash on the business relative to the quick current assets and other longer-term .

b. Provide the journal entry for the Year 2 product warranty expense.

c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

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