Question 17

Des Moines Company introduced during 2020. a new television model with a two-year warranty against defects. Des Moines Company estimates the warranty costs at 2% of peso sales within 12 months following the sale and at 4% in the second 12 months following the sale. Sales and actual warranty expense for the year ended December 31, 2020 are P3,000,000 and P45,000, respectively, and for the year ended December 31, 2021 are P5,000,000 and P150,000. respectively. Des Moines Company should report an estimated warranty liability in its December 31,2021 statement of financial position of