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#4

Volvo Group reports the following information for its product warranty costs as of December 31, 2013, along with provisions and utilizations of warranty liabilities for the year ended December 31, 2013 (SEK in millions).

Provision for product warranty Warranty provisions are estimated with consideration of historical claims statistics, the warranty period, the average time-lag between faults occurring and claims to the company and anticipated changes in quality indexes. Estimated costs for product warranties are recognized as cost of sales when the products are sold ? Differences between actual warranty claims and the estimated claims generally affect the recognized expense and provisions in future periods. Refunds from suppliers, that decrease the Volvo Group's warranty costs, are recognized to the extent these are considered to be certain. As of December 31, 2013 (2012) warranty cost provisions amount to 9,881 (8,852).

1. Complete Volvo's journal entry below to record its estimated warranty liabilities (provisions) for 2013.
2. Complete Volvo's journal entry below to record its costs (utilizations) related to its warranty program for 2013. Assume those costs involve replacements taken out of Inventory, with no cash involved.
3. How much warranty expense does Volvo report for 2013?

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#4 Volvo Group reports the following information for its product warranty costs as of December 31, 2013, along with provisions and utilizations of warranty liabilities for the year ended December 31, 2013 (SEK in millions). Provision for product warranty Warranty provisions are estimated with consideration of historical claims statistics, the warranty period, the average time-lag between faults occurring and claims to the company and anticipated changes in quality indexes. Estimated costs for product warranties are recognized as cost of sales when the products are sold ... Differences between actual warranty claims and the estimated claims generally affect the recognized expense and provisions in future periods. Refunds from suppliers, that decrease the Volvo Group's warranty costs, are recognized to the extent these are considered to be certain. As of December 31, 2013 (2012) warranty cost provisions amount to 9,881 (8,852). 1. Complete Volvo's journal entry below to record its estimated warranty liabilities (provisions) for 2013. 2. Complete Volvo's journal entry below to record its costs (utilizations) related to its warranty program for 2013. Assume those costs involve replacements taken out of Inventory, with no cash involved. 3. How much warranty expense does Volvo report for 2013? 1. Date Dec 31 Account Warranty Expense Estimated Warranty Liability To record warranty expense and liability. Debit Credit 2. Date Dec 31 Account Estimated Warranty Liability Inventory Debit Credit