In 2012, Quapau Products introduced a new line of hot water heaters that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 5% of sales revenue. First-year sales of the heaters were $300,000. An evaluation of the company’s claims experience in late 2013 indicated that actual claims were less than expected—4% of sales rather than 5%. Assuming sales of the heaters in 2013 were $350,000 and warranty expenditures in 2013 totaled $12,000, what is the 2013 warranty expense?
Answer to relevant QuestionsIn late 2011, what further information did the SEC provide about its plans with respect to future convergence between U.S. GAAP and IFRS?The following questions are adapted from a variety of sources including questions developed by the AICPA Board of Examiners and those used in the Kaplan CPA Review Course to study accounting changes and errors processing ...In 2013, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2010. The machine’s useful life was expected to be five years with no ...The Peridot Company purchased machinery on January 2, 2011, for $800,000. A five-year life was estimated and no residual value was anticipated. Peridot decided to use the straight-line depreciation method and recorded ...During 2011 and 2012, Faulkner Manufacturing used the sum-of-the-years’-digits (SYD) method of depreciation for its depreciable assets, for both financial reporting and tax purposes. At the beginning of 2013, Faulkner ...
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