Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consumer Corp sells dishwashers and washing machines that come with a two-year unimited warr anty on parts and labour for repairs The warranty is intended

image text in transcribed
image text in transcribed
Consumer Corp sells dishwashers and washing machines that come with a two-year unimited warr anty on parts and labour for repairs The warranty is intended to assure customers that the appliances will operate as advertised. The watranty is expected to cost 3% of sales in the fits year and 5% of sales in the second year, for a total of 8%. The provision for warranty has a credit balance of 5160,000 at the beginning of 205 The following events and decisions relate to the warranty 2005 soles revenue of 14,730,030 was genecates from products covered by the warranty. Iloth the sale and the arranty prowision must be recorded. 2006 Soles revenue from products coveret by the warranty were 16,700,000. Foth the sale and the warranty pronfsion fust be recorded. 2006 sales reverue of 16,700,000 was eenerated from peoducts cove od by the worranty. Warranty work consumed parts Iriventory with o cost of $134,000, and labour of 1294,003 . 25x6 Yearsend revfed Inditated that based on nes foformation the sercentace used as an ertimate for 2066 Eocause of a spectfic prevaleit defect to a setl discovered during repairs in 2006 , the conpuny anne,ficed that. It sould cover repafrs for this specific defect for in third year for all sales of froduct mase in 2005 and 206. The cost of this work was estinsted to be 15 of sales. This is in exess of the percentage increase descrited above. Products oere re-ereineered to elindinate the defect starting in acop. Required: 1 Prepare joutral entnes for the events listed above Because of uncentainty of estimates, no discounting is to be applied Assume all syles are in cash (if no entry is required for o transoction/event, select "No journal entry required" in the first account fieid, ) 2 Calculate the balance of the provision for warranty at 31 December 205 and 206

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing Real Issues And Cases

Authors: Michael Chris Knapp

9th International Edition

1133187900, 978-1133187905

More Books

Students also viewed these Accounting questions

Question

Define the velocity of the money supply.

Answered: 1 week ago

Question

What is the orientation toward time?

Answered: 1 week ago

Question

4. How is culture a contested site?

Answered: 1 week ago