Question: Please show calculations as to why the answer is $9,000 During 2011, Gum co. introduced a new product carrying a two- year warranty against defects.

Please show calculations as to why the answer is $9,000

During 2011, Gum co. introduced a new product carrying a two- year warranty against defects. the estimated warranty costs related to dollar sales are 2% within 12 months following the sale and 4% in the second 12 months of the sale. the sale and actual warranty expendiutres for the years ended December 31, 2011 and 2012 are as follows:

	Sales	Actual warranty expenditures
2011	150,000	2,250
2012	250,000	7,500
Total	400000	9,750

What amount should Gum report as warranty expense on its 12/31/2012 Income Statement?

The answer is $9,000 please show steps and calculations

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

17. The ledger accounts of Perera Company appear as follows on March 31, 20X1: ACCOUNT NO. ACCOUNT BALANCE 101 Cash $160,000 111 Accounts Receivable 119,640 121 Supplies 21,200 131 Prepaid Insurance...

Can u help me with this? 1. Chris Company estimates its annual warranty expense at 2% of annual net sales. The net sales for 2020 amounted to P 4,000,000. On January 1, 2020, the warranty liability...

I had attached with the problem. I need help solution with explanation. Thank you so much. God bless you! ACC 202 Exam 1 Name_______________________________________________________ For computational...

Please give me solutions to those problems. Document is attached below. Thank you Exam 1 Question 1 Carly Corporation issued $300,000 of 30-year, 8% bonds at 106 on January 1, 1 2016. Interest is...

During Year 1, Gum Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following the sale and 4% in...

I made a mistake to cancel my question. Is it still available? Question 1 (3 points25 minutes) On January 1, 2014, PVP Co. issued 6 % bonds with a face value of $400,000 for $345,644 when the market...

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 for...

During 2014 Gum Co. introduced a new product carrying a 2 year warranty against defects. The estimated warranty costs related to dollar sales are 4% within 12 months following sales and 8% in the...

During 2010, Gum Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within twelve months following the sale and 4%...

Carly Corporation issued $300,000 of 30-year, 8% bonds at 105 on January 1, 2022. Interest is payable semiannually on June 30th and December 31st. The straight-line method of amortization is to be...

Forbes magazine lists the worlds largest corporations by several categories including sales and profitability (profits according to the financial statements). When ranked by 2004 sales, six U.S....

(Default) The Republic of Delinquia has a non-disaster output level of $100 each year. With 10% probability each year, output falls to a disaster level of $80, and the country will feel so much pain...

1 . Malinois Inc. had fully vested incentive stock options exercisable at $ 5 0 per share to obtain 2 4 , 0 0 0 shares of common stock that were outstanding during a period when the average market...

Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following selected transactions relate to investments acquired by Rios Co., which has a fiscal year ending on...