Part 1

1(a). Which of Arcticas models is its best-selling snowmobile in the current year? 1(b). What is that models current year sales? 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year?

Part 2

1. How much total estimated warranty expense does Arctica report for the current year? 2. Record the adjusting entry at year-end of the current year to recognize warranty expense. 3. A customer brings in a snowmobile for warranty repairs on January 15 of the following year and the replacement parts cost $700. Record the journal entry for this repair.

Part 3

1. Looking at past years, does it appear that Arctica has usually underestimated or overestimated its warranty liabilities? 2. How would we suggest Arctica change its estimates of warranty liabilities in future periods? 3. Management tells us that Arctica plans to keep estimated warranty expense percentages to a minimum next year. Why might management want to keep these percentages low? 4. Alternatively, assume management informs us that Arctica had a great year and has very high net income. However, management is now concerned about high taxes, which are calculated as a percentage of net income. What might management try to do to lower Arcticas taxes?

Part 1

Req 1A

Which of Arcticas models is its best-selling snowmobile in the current year?:

• Jag
• Lynx
• Puma

Part 2

Required 2

General Journal:

• Accounts payable
• Accrued payroll payable
• Bonus payable
• Cash
• Cost of goods sold
• Deferred income tax liability
• Earned services revenue
• Earned ticket revenue
• Employee benefits plan payable
• Employee bonus expense
• Employee fed. inc. taxes payable
• Employee life insurance payable
• Employee medical insurance payable
• Employee union dues payable
• Estimated warranty liability
• Federal unemployment taxes payable
• FICAMedicare taxes payable
• FICASocial sec. taxes payable
• Income taxes expense
• Income taxes payable
• Interest expense
• Interest payable
• Merchandise inventory
• Notes payable
• Payroll taxes expense
• Repair parts inventory
• Salaries expense
• Salaries payable
• Sales
• Sales salaries expense
• Sales taxes payable
• State unemployment taxes payable
• Unearned services revenue
• Unearned ticket revenue
• Vacation benefits expense
• Vacation benefits payable
• Wages expense
• Warranty expense

Required 3

General Journal:

• Accounts payable
• Accrued payroll payable
• Bonus payable
• Cash
• Cost of goods sold
• Deferred income tax liability
• Earned services revenue
• Earned ticket revenue
• Employee benefits plan payable
• Employee bonus expense
• Employee fed. inc. taxes payable
• Employee life insurance payable
• Employee medical insurance payable
• Employee union dues payable
• Estimated warranty liability
• Federal unemployment taxes payable
• FICAMedicare taxes payable
• FICASocial sec. taxes payable
• Income taxes expense
• Income taxes payable
• Interest expense
• Interest payable
• Merchandise inventory
• Notes payable
• Payroll taxes expense
• Repair parts inventory
• Salaries expense
• Salaries payable
• Sales
• Sales salaries expense
• Sales taxes payable
• State unemployment taxes payable
• Unearned services revenue
• Unearned ticket revenue
• Vacation benefits expense
• Vacation benefits payable
• Wages expense
• Warranty expense

Part 3

1. Looking at past years, does it appear that Arctica has usually underestimated or overestimated its warranty liabilities?

• Neither overestimated nor underestimated
• Overestimated
• Underestimated

2. How would we suggest Arctica change its estimates of warranty liabilities in future periods?

• Decrease warranty estimate percentages
• Increase warranty estimate percentages
• Keep warranty estimate percentages the same
• No longer estimate warranty expenses

3. Why might management want to keep these percentages low?

• To decrease net income to show a smooth earnings pattern.
• To increase management bonus that is based on net income.
• To limit the amount of parts needing to be purchased.
• To limit the number of warranty claims.

4. What might management try to do to lower Arcticas taxes?

• Decrease warranty estimate percentages.
• Increase warranty estimate percentages.
• Limit parts purchased for warranty claims.
• Limit the number of warranty claims.

We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 $0 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 8% 7% 6% Puma 5% Jag 4% 3% 29 Lynx 1% 0% Lynx *** + ableau Puma Jag We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense 2 Years Ago Actual Warranty Claims: $21,660 $15,000 $10,000 $5,000 $0 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 896 7% 6% Puma 5% Jag 4% 3% 296 Lynx 1% 0% Puma Jag Lynx 4+ ableau We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 2 Years Ago Estimated Warranty Expense: $18,560 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 896 7% 6% Puma 5% Jag 4% 3% 2% Lynx 1%... 0% Lynx 4+ableau Puma Jag We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 8% 79 6% Puma 5% Jag 4% 3% 2% Lynx Lynx Estimated Warranty Expense Percentage: 4% 19 09 Puma Jag Lynx * + ableau We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 8% 796 6% Puma 5% Jag 4% Puma Estimated Warranty Expense Percentage: 7% 3% 2% Lynx 1% 0% Puma Jag Lynx ***+ableau We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 8% 79 6% Puma 5% Jag 4% 3% 2% Jag Estimated Warranty Expense Percentage: 6% 1% 0% Puma Jag Lynx *** + ableau We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 8% 79 6% Puma 5% Puma Current Year Sales: $60,000 19 4% 3% 2% Lynx 1% 0% Puma Jag Lynx *** + ableau We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 8% 79 6% Puma 5% Jag 4% 3% Lynx Current Year Sales: $80,000 2% Lynx 1% 0% Puma Jag Lynx *** + ableau We are hired as consultants to assist Arctica Co. in accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 | Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 8% 79 6% Puma 5% Jag 4% Jag Current Year Sales: $105,000 3% 2% Lynx 1% 0% Puma Jag Lynx *** + ableau 1(a). Which of Arctica's models is its best-selling snowmobile in the current year? 1(b). What is that model's current year sales? 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 and 3 Which of Arctica's models is its best-selling snowmobile in the current year? Which of Arctica's models is its best-selling snowmobile in the current year? Raq 1A Req 1B > 1(a). Which of Arctica's models is its best-selling snowmobile in the current year? 1(b). What is that model's current year sales? 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year? Complete this question by entering your answers in the tabs below. Req IA Reg 1B Req 2 and 3 What is that model's current year sales? Current year sales 1(a). Which of Arctica's models is its best-selling snowmobile in the current year? 1(b). What is that model's current year sales? 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2 and 3 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year? 2. Total estimated warranty expense for 2 years ago Estimated warranty expense (Jag model) for the current year 3. 1. How much total estimated warranty expense does Arctica report for the current year? 2. Record the adjusting entry at year-end of the current year to recognize warranty expense. 3. A customer brings in a snowmobile for warranty repairs on January 15 of the following year and the replacement parts cost $700. Record the journal entry for this repair. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Record the adjusting entry at year-end of the current year to recognize warranty expense. View transaction list Journal entry worksheet 1. How much total estimated warranty expense does Arctica report for the current year? 2. Record the adjusting entry at year-end of the current year to recognize warranty expense. 3. A customer brings in a snowmobile for warranty repairs on January 15 of the following year and the replacement parts cost $700. Record the journal entry for this repair. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 A customer brings in a snowmobile for warranty repairs on January 15 of the following year and the replacement parts cost $700. Record the journal entry for this repair. View transaction list Journal entry worksheet 1(a). Which of Arctica's models is its best-selling snowmobile in the current year? 1(b). What is that model's current year sales? 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year? Complete this question by entering your answers in the tabs below. Req IA Reg 1B Req 2 and 3 What is that model's current year sales? Current year sales 1(a). Which of Arctica's models is its best-selling snowmobile in the current year? 1(b). What is that model's current year sales? 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2 and 3 2. What is the total estimated warranty expense for 2 years ago? 3. What is the estimated warranty expense that Arctica reports for its Jag model for the current year? 2. Total estimated warranty expense for 2 years ago Estimated warranty expense (Jag model) for the current year 3. 1. How much total estimated warranty expense does Arctica report for the current year? 2. Record the adjusting entry at year-end of the current year to recognize warranty expense. 3. A customer brings in a snowmobile for warranty repairs on January 15 of the following year and the replacement parts cost $700. Record the journal entry for this repair. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Record the adjusting entry at year-end of the current year to recognize warranty expense. View transaction list Journal entry worksheet 1. How much total estimated warranty expense does Arctica report for the current year? 2. Record the adjusting entry at year-end of the current year to recognize warranty expense. 3. A customer brings in a snowmobile for warranty repairs on January 15 of the following year and the replacement parts cost $700. Record the journal entry for this repair. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 A customer brings in a snowmobile for warranty repairs on January 15 of the following year and the replacement parts cost $700. Record the journal entry for this repair. View transaction list Journal entry worksheet