Question

Ford Motor Company disclosed estimated product warranty payable for comparative years as follows.


Ford’s sales were $130,800 million in 2001 and increased to $134,400 million in 2002.
Assume that the total cash paid on warranty claims during 2002 was $12,000 million.
a. Why are short-and long-term estimated warranty liabilities separately disclosed?
b. Provide the journal entry for the 2002 product warranty expense.
c. Assuming $12,000 million in warranty claims paid during 2002, explain the $2,881 million increase in the total warrantyliability.


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  • CreatedNovember 08, 2012
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