General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows: (in millions) Year 2…………….Year 1 Current estimated product warranty payable……………….$3,059…………….$2,884 Noncurrent estimated product warranty payable…………….4,327………………4,147 Total…………………………………………………………$7,386……………$7,031 Presume that GM’s sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million. a. Why are short- and long-term estimated warranty liabilities separately disclosed? 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? View Solution: General Motors Corporation GM disclosed estimated product warranty payable for

General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows: (in millions) Year 2…………….Year 1 Current estimated product warranty payable……………….$3,059…………….$2,884 Noncurrent estimated product warranty payable…………….4,327………………4,147 Total…………………………………………………………$7,386……………$7,031 Presume that GM’s sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million. a. Why are short- and long-term estimated warranty liabilities separately disclosed? 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? View Solution: General Motors Corporation GM disclosed estimated product warranty payable for

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter10: Liabilities: Current, Installment Notes, And Contingencies

Section: Chapter Questions

Problem 10.23EX

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18. The following information pertains to Q Company:Trade accounts receivable, net of P10,000 credit balance in customers’ accounts, P350,000Notes receivable, P30,000 due in 12 months, P210,000Advances to officers, due in 2 years, P20,000Advances to suppliers, P10,000Sale price of unsold goods sent on consignment to Entity F (120% of cost), P24,000Security deposit paid on a one-year lease contract, P6,000Dividends receivable, P30,000Determine the total current receivables.
An entity normally provides 4% warranty on its products. The provision in the first quarter was for sales amounting to P5,000,000. For the second quarter, a major issue was found on its products and warrantly claims were expected to be 12% for the whole year. Sales for the second quarter amounted to P15,000,000. What amount should be reported as warranty expenses in the interim income statement for the 2nd Quarter? A. 1,800,0002 B. 2,400,000 C. 2,200,000 D. 1,600,000
1) A company’s trade payables days and trade receivables days are 60 daysand 30 days, respectively.The sales and purchase information for the year was as follows:Sales Purchases£m £mCash 27 10Credit 35 18Total 62 28What was the trade receivables and trade payables balances at the year end?a) £5.10m and £4.60mb) £2.21m and £1.64mc) £5.75m and £1.48md) £2.88m and £2.96m
1. An analysis of the receivables as at the end of the year of Madeni Limited revealed the followingAgeBalance –Ksh ‘000Current 3,4001 to 30 days 1,20031 to 60 days 2,70061 to 90 days 2,30091 to 120 days 1,400121 to 180 days 700181 to 365 days 1,000Over 365 days 1,30014,000From experience, the company estimates that 1% of the current debtors will not pay, 3% of debtors between 1-30 days will not pay, 5% of the debtors between 31-60 days will not pay, 7% of the debtors between 61-90 days will not pay, 10% of the debtors between 91-120 days will not pay, 15% of the debtors between 121-180 days will not pay, 20% of the debtors between 181-365 days will not pay and 50% of the over 365 days old debtors will not pay.Required:a) Using the Aging Method, determine the balance of allowance for doubtful debts as at the end of the yearb) Pass the journal entry needed. The beginning balance for the Allowance for Doubtful accounts is Ksh 1,750,000
On July 1, 20X4, ABC Corp sold goods and receive a 12% P400,000 note due on July 1, 20X7. What was the amount of interest income should be included in the 20X4 financial statement? 20,000 24,000 48,000 0
tion 8Income statement for the year ended 31 December, 2019 of KKMTN Ghana Ltd2018 2019ȼ ‘000 ȼ ‘000Turnover 420,000 523,600Cost of sales (330,000) (417,200)Gross profit 89,000 106,400Expenses:Administration 44,600 50,200Selling and distribution 15,400 (60,000) 19,600 (69,800)Profit before interest 29,000 36,600Debenture interest - (2,800)Net profit before tax 29,000 33,800Taxation (8,000) (10,000)Net Profit after tax 21,000 23,800Ordinary dividend paid 8,400 9,250Ordinary shares issued 12 million and trading at ȼ3 each as at yesterday onGSE.You are required to compute the following investment ratios:a). Earnings per shareb). Dividend per sharec). Payout ratiod). Price earnings ratioe). Earnings yield
2. A credit sale of P750 is made on June 13, term 2/10, net/30. A return of P50 is granted on June 16. The amount received as payment in full on June 23 is: a. P700 b. P650 c. P686 d. P685
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18. The following information pertains to Q Company: Trade accounts receivable, net of P10,000 credit balance in customers’ accounts, P350,000 Notes receivable, P30,000 due in 12 months, P210,000 Advances to officers, due in 2 years, P20,000 Advances to suppliers, P10,000 Sale price of unsold goods sent on consignment to Entity F (120% of cost), P24,000 Security deposit paid on a one-year lease contract, P6,000 Dividends receivable, P30,000 Determine the total current receivables. The correct answer is: 436,000
18. The following information pertains to Q Company: Trade accounts receivable, net of P10,000 credit balance in customers’ accounts, P350,000 Notes receivable, P30,000 due in 12 months, P210,000 Advances to officers, due in 2 years, P20,000 Advances to suppliers, P10,000 Sale price of unsold goods sent on consignment to Entity F (120% of cost), P24,000 Security deposit paid on a one-year lease contract, P6,000 Dividends receivable, P30,000 Determine the total current receivables. The correct answer is: 436,000 REQUIRED: Provide a step-by-step solution.
27. GPS Company estimated annual warranty expense at 8% of net sales. The following data relate to the current year: Warranty liability, January 1: before adjustment - 100,000 debit. After adjustment - 540,000 credit. What is the amount of net sales for the current year? * a. 8,000,000 b. 6,750,000 c. 5,500,000 d. 1,250,000
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