Electrical Limited sells various appliances and the company has a 31 December financial year-end . All...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Electrical Limited sells various appliances and the company has a 31 December financial year-end . All minor appliances are sold with a six-month warranty, while major appliances are sold with a one-year warranty. The company's financial statements showed a warranty provision balance of R225 500 for the financial year ended 31 December 2020. During the 2021 financial year, Electrical Limited spent R345 600 on repairs done to goods under warranty. R222 200 of the amount related to items sold during the 2020 financial year. Electrical Limited calculates their warranty provision as a percentage of the sales price and an expectation of the item being brought in for repairs, based on past experience of repairs. For the 2021 financial year, the company sold minor appliances of R2 505 000 and major appliances of R4 785 000. For minor appliances, 5% of the sales price is provided for as repair costs, and the probability for minor appliances to be brought in for repairs while under warranty is 65 %. For major appliances 10% of the sales price is provided for as repair costs, and the for major appliances to be brought in for repairs while under warranty is probability 38 %. REQUIRED : Prepare the journal entries to account for the above information relating to the provision for refunds in the records of Electrical Limited for the financial year ended 31 December 2021. Show all calculations. Include statement references ("journal narrations "). Round all answers to the nearest Rand. Electrical Limited sells various appliances and the company has a 31 December financial year-end . All minor appliances are sold with a six-month warranty, while major appliances are sold with a one-year warranty. The company's financial statements showed a warranty provision balance of R225 500 for the financial year ended 31 December 2020. During the 2021 financial year, Electrical Limited spent R345 600 on repairs done to goods under warranty. R222 200 of the amount related to items sold during the 2020 financial year. Electrical Limited calculates their warranty provision as a percentage of the sales price and an expectation of the item being brought in for repairs, based on past experience of repairs. For the 2021 financial year, the company sold minor appliances of R2 505 000 and major appliances of R4 785 000. For minor appliances, 5% of the sales price is provided for as repair costs, and the probability for minor appliances to be brought in for repairs while under warranty is 65 %. For major appliances 10% of the sales price is provided for as repair costs, and the for major appliances to be brought in for repairs while under warranty is probability 38 %. REQUIRED : Prepare the journal entries to account for the above information relating to the provision for refunds in the records of Electrical Limited for the financial year ended 31 December 2021. Show all calculations. Include statement references ("journal narrations "). Round all answers to the nearest Rand.
Expert Answer:
Related Book For
Auditing Assurance Services and Ethics in Australia an Integrated Approach
ISBN: 978-1442539365
9th edition
Authors: Alvin A Arens, Peter J. Best, Greg Shailer, Brenton Fiedler
Posted Date:
Students also viewed these accounting questions
-
A company sells health insurance policies. The company has a large sales force comprised of independent contractors. Some of its sales agents, usually after a significant period of service, are...
-
A second project considered by the company has a 5 year life with an initial investment of $340,000 is expected to have an after-tax cash flow of $70,000 per year for the first 2 years, $90,000 per...
-
The company has a marginal tax rate if 40 percent. a study of publicly held companies in this line of business suggests that the required return on equity is about 17 percent. The company's debt is...
-
As Paradise Properties CEO Ajanee Kallapur began thinking about what aspects of sustainability were most important for Paradise Cove, she realized that success of the hotel was critically linked to...
-
Why do foreign market participants attempt to monitor the Feds direct intervention efforts? How does the Fed attempt to hide its intervention actions? The media frequently report that the dollars...
-
In 2021, your client, Clear Corporation, changed from the cash to the accrual method of accounting for its radio station. The company had a positive 481 adjustment of $2,400,000 as a result of the...
-
Assume that the flow around the long circular cylinder of Fig. P6.59 is nonviscous and incompressible. Two pressures, \(p_{1}\) and \(p_{2}\), are measured on the surface of the cylinder, as...
-
Youre the CFO of the Wachusett Window Company, which sells windows to residential builders. The firms customers tend to be small, thinly capitalized construction companies that are frequently short...
-
A 2,274.88 kilogram truck runs into the rear of a 1,067.75 kilogram stationary car. The truck and car are locked together after the collision and move with speed 8.93 meters per second. What was the...
-
The file Problem5_9.xlsx contains passing statistics for NFL teams during the 2017 season. Using formulas that do combine INDEX and MATCH in the same cell, return the desired statistics in the range...
-
During your year-end review, the sales manager tells you she hos spoken with four big clients who all wanted to make sure there will be enough inventery for purchases in the first week of next year....
-
An important practice is to check the validity of any data set that you analyze. One goal is to detect typos in the data, and another would be to detect faulty measurements. Recall that outliers are...
-
Consider the structure and applied actions shown in the figure below. Use the moment distribution method to analyse the frame using 1-decimal place accuracy, draw the bending moment diagram. P B A...
-
A cylindrical beam of length 2m and diameter of 120 mm, is arranged with a loading in the middle and two supports either end, as shown in Figure Q13. Select the correct Bending Stress in Mega-Pascals...
-
Evaluate 8 23r
-
Power Audio Inc. manufactures audio speakers. Each speaker requires $127 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period:...
-
Find the asset turnover ratio of a firm that has ROE of 58.5%, a net profit margin of 4.5%, and 6.5 dollars in assets per dollar of equity. Then use this value as Z in the following calculation: You...
-
1. Below is depicted a graph G constructed by joining two opposite vertices of C12. Some authors call this a "theta graph" because it resembles the Greek letter 0. a. What is the total degree of this...
-
What have been the most significant regulatory developments in Australia affecting auditor liability since 2001?
-
Brian Day, a staff assistant, has been asked to analyse interest and legal expenses as part of the first-year audit of Rosow Manufacturing Limited. In searching for a model to follow, Day looked at...
-
What steps should a public accountant take if, during a compilation engagement, he or she becomes aware that the financial statements are misleading?
-
What are the possible design issues for the temptation EBT, when linked to the design phase?
-
List a couple of advantages of using the stable analysis pattern for temptation.
-
List two scenarios, which will not be covered by the temptation analysis pattern.
Study smarter with the SolutionInn App