PROBLEM N03 LAPAYAT CORPORATION, a client, requests that you compute the appropriate balance of its estimated liability for product warranty account for a statement as of June 30, 2018- Lapayat Corporation manufactures television components and sells them with a IB month warranty under which defective components will be replaced without charge. On December 31, 2017, Estimated Liability for Product warranty had a balance of P20,000. By June 30, 2018, this balance had been reduced to P120,400 by debits for estimated net cost of components returned that had been sold in 2017. The corporation started out in 2018 expecting 7% of the peso volume of sales to be returned. However, due to the introduction of new models during the year, this estimated percentage of returns was increased to 10% on May 1. It is assumed that no components sold during a given month are returned in that month. Each component is stamped with a date at time of sale so that the warranty may be properly administered. The following table of percentages indicates the likely pattern of sales returns during the 6month period of the warranty. starting with the month following the sale of components. Month Following Sale Percentage of Total Returns Expected First 30% Second 20 Third 20 Fourth through sixth10% each month 30 100% Gross sales of components were as follows for the rst six months of 2018: Month Amount Month Amount January P4,200,000 April P3,250,000 February 4,700,000 May 2,400,000 March 3,900,000 June 1,900,000 The corporation's warranty also covers the payment of freight cost on defective components returned and on the new components sent out as replacements. This freight cost runs 2 approximately 5% of the sales price of the components returned. The manufacturing cost of the component is roughly 70% of the sales price, and the salvage value of returned components averages 10% of their sales price. Returned components on hand at December 31, 2017, were thus valued in inventory at 10% of their original sales price. Based on the given information, determine the foiiowing: 1. Total estimated returns from the sales made during the first 6 months of 2018 . P1553500 P1,481,500 P1,651,000 P1,424,500 OPUPU