Ace Appliances Inc. offers a 12-month warranty on all its appliances. Ace Appliances estimates that one appliance out of each 1000 sold will require warranty service and that the average cost per warranty claim is $300. Ace sold 30,000 appliances during 2020. The estimated warranty liability at the beginning of the year was $ 4,500. Claims of $7,000 were actually paid during the year to honour warranties. Ace Appliances has a December 31 year-end. Required: 1. Calculate the estimated warranty expense for Ace Appliances for 2020. ___________________ 2. Calculate the balance of the Estimated Warranty Liability account at December 31, 2020
Ace Appliances Inc. offers a 12-month warranty on all its appliances. Ace Appliances estimates that one appliance out of each 1000 sold will require warranty service and that the average cost per warranty claim is $300. Ace sold 30,000 appliances during 2020. The estimated warranty liability at the beginning of the year was $ 4,500. Claims of $7,000 were actually paid during the year to honour warranties. Ace Appliances has a December 31 year-end. Required: 1. Calculate the estimated warranty expense for Ace Appliances for 2020. ___________________ 2. Calculate the balance of the Estimated Warranty Liability account at December 31, 2020
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 57BE
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Ace Appliances Inc. offers a 12-month warranty on all its appliances. Ace
Appliances estimates that one appliance out of each 1000 sold will require warranty service and
that the average cost per warranty claim is $300. Ace sold 30,000 appliances during 2020. The
estimated warranty liability at the beginning of the year was $ 4,500. Claims of $7,000 were
actually paid during the year to honour warranties. Ace Appliances has a December 31 year-end.
Required:
1. Calculate the estimated warranty expense for Ace Appliances for 2020.
___________________
2. Calculate the balance of the Estimated Warranty Liability account at December 31, 2020
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