Macy Furniture sells a line of products that carry a three-year warranty against defects at no...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Macy Furniture sells a line of products that carry a three-year warranty against defects at no extra charge. Based on industry experience, the estimated warranty costs are as follows: first year following the year of sale, 1% of sales; second year following the year of sale, 3% of sales; and third year following the year of sale, 5% of sales. Sales and actual warranty expenditures for the first three-year period follow. Credit Actual Warranty Sales Year 1 $80,000 Year 2 110,000 Year 3 120,000 Expenditures $1,000 4,100 9,800 Required a. Provide entries for each of the three years for (1) credit sales, (2) estimated warranty expense, and (3) actual warranty cash expenditures. b. What amount should be reported as a liability on the balance sheet at the end of each year? c. Assume instead that at the start of Year 4, the company changed its estimate of the second year after sale to 2% of sales rather than 3%. Provide the adjusting entry (if required) to adjust for warranty expense recognized in prior years. Note: Round your answers to the nearest whole dollar. Note: If a line in a journal entry isn't required for the transaction, select "N/A - Debit account" or "N/A - Credit account" as the account names and leave the Dr. and Cr. answers blank (zero). Macy Furniture sells a line of products that carry a three-year warranty against defects at no extra charge. Based on industry experience, the estimated warranty costs are as follows: first year following the year of sale, 1% of sales; second year following the year of sale, 3% of sales; and third year following the year of sale, 5% of sales. Sales and actual warranty expenditures for the first three-year period follow. Credit Actual Warranty Sales Year 1 $80,000 Year 2 110,000 Year 3 120,000 Expenditures $1,000 4,100 9,800 Required a. Provide entries for each of the three years for (1) credit sales, (2) estimated warranty expense, and (3) actual warranty cash expenditures. b. What amount should be reported as a liability on the balance sheet at the end of each year? c. Assume instead that at the start of Year 4, the company changed its estimate of the second year after sale to 2% of sales rather than 3%. Provide the adjusting entry (if required) to adjust for warranty expense recognized in prior years. Note: Round your answers to the nearest whole dollar. Note: If a line in a journal entry isn't required for the transaction, select "N/A - Debit account" or "N/A - Credit account" as the account names and leave the Dr. and Cr. answers blank (zero).
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these accounting questions
-
Can someone please summarize the case study below: if you know about the case IKEA Looks to Further Penetrate the U.S. Market 10 CASE Synopsis: IKEA is known around the world for its stylish,...
-
Instruction to be followed. > There are 10 problems/questions: >> you have one attempt per question >> 1 is a general journal problem >>> a text entry general journal is provided >>> there are enough...
-
Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7200 copies. The cost of one copy of the book is $14.50....
-
June Wade has invested in two start-up companies. At the end of the first year, she asks you to evaluate their operating performance. The following operating data apply to the first year: Company...
-
1. The first question asks students to evaluate Vans early strategy of not advertising. 2. The second question asks students to consider the success of the early Vans advertising activities related...
-
What is the purpose of timelines in an investigation?
-
Using the audit risk model, state the effect on control risk, inherent risk, acceptable audit risk, and planned evidence for each of the following independent events. In each of the events a to j,...
-
Q. In order to attain economic progress, humans use the natural resources of the planet. Nature is fashioned into products for human consumption. This economic activity is needed to create jobs and...
-
List and explain at least three (3) key concepts that you know about Australias anti-discrimination legislation
-
Peter and Pan are partners in Captain Hook Stationers. The following list of accounts show balances as at 3 1 December 2 0 2 2 , except for those accounts that have been stated differently....
-
What is environmental scanning and describe how the environment affects marketing in relation to the automobile detailing business
-
What are the changes in the Chinese development strategy and priorities initiated with the 13th Five-Year plan?
-
Explain how output (GDP) is determined according to the classical model and how it is distributed among the factors of production according to the neoclassical model
-
The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.1 per share on its stock. The dividends are expected to grow at a constant rate of 3 percent per year indefinitely. If investors require...
-
3 to 1 stock split after close of day after close of day on 1st january 2010 2 to 1 stock split after close of day after close of day on 1st january 2010 Assign the base period value of 100 Compute...
-
How does Kant answer Humes bundle theory of self? Do you think he is successful?
-
On January 1, 2007 the Alice Company leases electronic equipment for five years, agreeing to pay $70,000 annually at the beginning of each year under the non-cancelable lease. Superior Electronics...
-
The following are accounting procedures and practices used by several companies. A. As soon as it purchases inventory, Sokolich Company records the purchase price as cost of goods sold to simplify...
-
Frahm Corporation presents the following account balances, after adjustments, on December 31, 2007: The following information is also available: 1. The income tax rate on all items is 30%. 2. 10,000...
-
When nitrogen and fluorine combine to form a molecule, the most likely chemical formula is: (a) N 3 F. (b)N 2 F. (c) NF 4 . (d) NF. (e) NF 3 .
-
In terms of the periodic table, is there an abrupt or gradual change between ionic and covalent bonds? (a) An abrupt change occurs across the metalloids. (b) Actually, any element of the periodic...
-
A substance consisting of which of the two molecules shown below should have a higher boiling point? Why? (a) the molecule on the left, SCO, because it comes later in the periodic table (b) the...
Study smarter with the SolutionInn App