Kamei Company sells color television sets with a five-year repair warranty. The sale price for each...
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Kamei Company sells color television sets with a five-year repair warranty. The sale price for each set is P15,000. The average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in the first year and 40% in the second year. 2020 2021 Number of sets sold 300 500 Total payments for warranty repairs 40,000 150,000 Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journal entries in connection with the warranty using the "accrual" approach. 3. Determine the estimated warranty liability on December 31, 2021. 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021. Kamei Company sells color television sets with a five-year repair warranty. The sale price for each set is P15,000. The average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in the first year and 40% in the second year. 2020 2021 Number of sets sold 300 500 Total payments for warranty repairs 40,000 150,000 Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journal entries in connection with the warranty using the "accrual" approach. 3. Determine the estimated warranty liability on December 31, 2021. 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warranty repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021.
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Related Book For
Principles Of Accounting Volume 1 Financial Accounting
ISBN: 9781593995942
1st Edition
Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper, OpenStax
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