How much is the warranty expense in 2021?
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- On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000A new product introduced by Reyes Promotions carries a two-year warranty against defects. The estimated warranty costs related to peso sales are as follows: Year of sale.. .3% Year after sale..... .5% Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021 are as follows: Sales 800,000 1,000,000 Expenditures 12,000 70,000 2020 2021 11. How much is the warranty expense in 2021? 12. How much is the estimated liability as of December 31, 2021? Assume the 2020 warranty did not yet expire.
- Relay Company estimated that annual warranty expense at 2% of annual net sales. The net sales for 2021 amounted to P4,000,000. On January 1, 2021, the warranty liability was P60,000 and the warranty payments during 2021 totaled P50,000. What is the warranty liability on December 31, 2021? O P10,000 O P90,000 O P70,000 O P80,000PART A BB Inc's sales during 2021 totaled $375,000, and the company estimates that warranty costs will be 4.4% of sales. The adjusted balance in Estimated Warranty Payable on December 31, 2020 was $21,000 Cr. BB Inc offers replacement products under its warranty plan. During 2021, warranty replacement costs were $12,900. A. Prepare the journal entry to record the 2021 warranty expense, and also the journal entry to record replacement costs under warranty. Use December 31.s the date for both. B. Determine the final balance in the warranty liability account on December 31, 2021. C. Do you recommend that BB Inc retain the 4.4% estimate? Why or why not. Answer in one brief bullet point or sentence. PART B BB Inc operates in Nova Scotia where HST is 15%. During the first quarter (January 1 to March 31) of 2022, 8B Inc purchased $13,000 inventory plus HST. During the first quarter, BB Inc recorded $17,000 sales revenue and charged customers HST. Prepare the journal entry to show BB Inc's…Siomai Company estimates its annual warranty expense as 2% of annual net sales. The following data relate to calendar year 2020:• Net sales- P3,200,000• Warranty liability (debit balance before adjustment) - P10,000• Warranty liability (credit balance after adjustment)- P54,000. Which of the following entries was made to record the 2020 estimated warranty expense? A. DR: Warranty Expense- P54,000 and Retained Earnings- P10,000; CR: Estimated Warranty Liabilities- P64,000 B. DR: Warranty Expense- P64,000; CR: Retained Earnings- P10,000 and Estimated Warranty Liabilities- P54,000 C. DR: Warranty Expense- P44,000; CR: Estimated Warranty Liabilities- P44,000 D. DR: Warranty Expense 64,000; CR: Estimated Warranty Liabilities- P64,000
- Carpet Company had a balance of P800,000 in the warranty liability account on December 31, 2020. The warranty expenditures totaled P2,500,000 for 2021. The warranty expense is calculated at 6% of sales. Sales amounted to P40,000,000 for 2021. What was the balance in the warranty liability account on December 31, 2021?During 2018, Stable Company introduced a new line of product that carry a three-year warranty against manufacturer’s defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: Sales Actual Warranty Expenditures 2018 P 400,000 P 6,000 2019 1,000,000 40,000 2020 1,400,000 90,000 P2,800,000 P136,000 What amount should Stable report as estimated warranty liability at December 31, 2020? What amount of warranty expense should be reported for 2019?1. FDN Trading received the following promissory notes from various customers during 2020 in the course of selling its merchandise: One-year 20% note for P103,000 Four-month 12% note for P85,000 180-day 18% note for P80,000 All these notes were collected at their maturity dates during the year. How much is total interest income to be recorded by FDN Trading during 2020? 2. On November 1, 2021, FDN Trading accepted a 90-day, 8% P4,000,000 note from ABC Co. FDN immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN assumes the interest expense associated with this transaction. How much interest expense should FDN Trading debit on its records? Calculate the total interest expense and NOT the net interest expense. 3. The total assets of the business amounted to P1,500,000 and liabilities amounted to P200,000. The owner withdrew cash amounting to P70,000. How much is the total liabilities and owner’s equity after the withdrawal?
- In 2023, Ayayai Corp. began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2023 and 2024 are presented below: 2023 2024 Sales Actual warranty expenditures O $74900 O $12020 $469000 $601000 O $51000 O $23900 17000 Ayayai uses the expense approach to account for warranties. What is the estimated warranty liability at the end of 2024? 34000The balance of the Estimated Warranty Liability account was $12,000 on January 1, 2019, and $13,600 on December 31, 2022. Based on an analysis of warranty claims during the past several years, this year's warranty provision was established at 3% of sales, and sales during the year were $800,000. Required: a). What amount of warranty expense will appear on the income statement for the year ended December 31, 2022? b). What were the actual costs of servicing products under warranty during the year?29.On September 12, 2021, an entity received a 120-day, 9% note for P50,000 for an overdue account from a customer. The entity uses an accounting year that ends on December 31. Which of the following statements is true? Use 360-day year.A. The maturity date of the note is January 12, 2022.B. The maturity value of the note is P51,500.C. Accrued interest on the note at December 31, 2021 is P1,375. a. A, B, and C b. A and B only c. B and C only d. B only