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please assist Jarvis Ltd accountant is reviewing its warranty obligations. Based on sales during 2020 it has established that if all its gadgets sold required
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Jarvis Ltd accountant is reviewing its warranty obligations. Based on sales during 2020 it has established that if all its gadgets sold required minor repairs this would cost P1000000 whereas if major repairs were required this would cost P6000000. Jarvis Ltd expects that 75% of gadgets will have no faults, 20% will need minor repairs and 5% major repairs. (a) Calculate the provisions to be recognized in the statement of profit and loss for the year ended 31 December 2020. (3 marks) (b) State the double entry accounting in respect of the provisions. (2 marks)Step by Step Solution
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