Question: Ford Motor Company disclosed the following estimated product warranty payable

Ford Motor Company disclosed the following estimated product warranty payable for two recent years.


Ford’s sales were $128,954 million in Year 2 and $116,283 million in Year 1.
Assume that the total paid on warranty claims during Year 2 was $2,176 million.
a. Illustrate the effects on the accounts and financial statements for the Year 2 product warranty expense.
b. Assuming $2,176 million in warranty claims paid during Year 2, explain the $501 ($3,147 - $2,646) million decrease in the total warranty liability from Year 1 to Year2.
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  • CreatedFebruary 04, 2014
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