4. Based on the limited information available about the warranty expense and settlements during these three years, should IBM reduce the ratio of the warranty expense to net sales in future years? O Yes O No 5-a. Compute the extended warranty revenue recognized during 2017 and 2018. (Enter your answers in millions of dollars.) Extended Warranty revenue 2018 View transaction list 2017 5-b. Prepare the journal entry to record the revenue recognized in 2018. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account fleld. Enter your answers in millions of dollars.)

4. Based on the limited information available about the warranty expense and settlements during these three years, should IBM reduce the ratio of the warranty expense to net sales in future years? O Yes O No 5-a. Compute the extended warranty revenue recognized during 2017 and 2018. (Enter your answers in millions of dollars.) Extended Warranty revenue 2018 View transaction list 2017 5-b. Prepare the journal entry to record the revenue recognized in 2018. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account fleld. Enter your answers in millions of dollars.)

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.5P

See similar textbooks

Similar questions

Adjusting Income Statements For Warranty Expense Income statement data for Whirlpool Industries follow. Adjust the income statement for 2014, 2015, and 2016 under the assumption that warranty expense is a constant 1.547% of net sales for each year. The company's tax rate is 30%. $ millions Net sales Warranty expense 2016 2015 2014 414 $26,566 $26,296 $25,524 438 361 Determine the adjusted warranty expense for each year. Round answers to one decimal. $ millions 2016 2015 2014 Adjusted warranty expense $ $ $ Determine the income statement adjustments for each year. • Round answers to one decimal. • Use a negative sign to indicate if the adjustment decreases an account balance. Income Statement Adjustments, $ mil. 2016 2015 Warranty expense Income tax expense Net Income 2014
Net revenues Standard warranty liability, end of year 158 Charges incurred during the year 163 Extended warranty deferred revenue, end of year 573 Revenue deferred for new extended warranty contracts 260 Warranty expense Required: 1. Compute the amount of warranty expense for 2017 and 2018. (Enter your answers in millions of dollars.) No 1 View transaction list View journal entry worksheet 2 2018 2. Prepare journal entries to record both the warranty expense for 2018 and the payments made under the warranty during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions of dollars.) Transaction A 2017 B 2018 2017 2016 $81,591 $81, 139 $81,919 192 205 606 307 Warranty expense Estimated warranty liability Estimated warranty liability Cash 196 204 571 303 General Journal Debit Credit Ⓒ
ESTIMATED WARRANTIES Feel Na Feel has a one-year product warranty on some selected items in its product line. The estimated warranty liability on sales made during the 2018-2019 fiscal year and still outstanding as of March 31, 2019 amounted to P180,000. The warranty cost on sales made from April 1 2019, through March 31,2020, are estimated as P520,000. The actual warranty cost incurred during the current 2019-2020 fiscal year are as follows: Warranty claims honored on 2018-2019 sales P 180,000 Warranty claims honored on 2019-2020 sales 178,000 Total warranty claims honored P 358,000 The company's reporting period is starts at April 1 of the current year and ends in March 31 of the following year Required: Balance of estimated warranty payable on march 31,2020
Other accrued liabilities—warranties Kohl Co. provides warranties for many of its products. The January 1, 2016, balance of the Estimated Warranty Liability account was $35,200. Based on an analysis of warranty claims during the past several years, this year’s warranty provision was established at 0.4% of sales. During 2016, the actual cost of servicing products under warranty was $15,600, and sales were $3,600,000.Page 258Required:What amount of Warranty Expense will appear on Kohl Co.’s income statement for the year ended December 31, 2016?What amount will be reported in the Estimated Warranty Liability account on the December 31, 2016, balance sheet?
Other accrued liabilities—warranties The balance of the Estimated Warranty Liability account was $25,000 on January 1, 2016, and $34,400 on December 31, 2016. Based on an analysis of warranty claims during the past several years, this year’s warranty provision was established at 1.5% of sales, and sales during the year were $2,600,000.Required:What amount of warranty expense will appear on the income statement for the year ended December 31, 2016?What were the actual costs of servicing products under warranty during the year?
ces The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical's fiscal year ends on December 31. Financial statements are issued in April 2025. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 4% of sales. Sales were $2 million (all credit) for 2024. Actual warranty expenditures were $30,800 and were recorded as warranty expense when incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 2% of credit sales will eventually prove uncollectible. 3. In December 2024, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23, 2025, Classical reached a settlement with state authorities to pay $1.5 million in penalties. 4. Classical is the plaintiff in a $4 million lawsuit filed against a…
Balance, beginning of period Warranties issued during the period Settlements made during the period Recalls and changes to pre-existing warranty liabilities Balance, end of period The liability associated with recalls was $71.8 million, $34.6 million, and $13.3 million at December 31, 2018, 2017, and 2016, respectively. Required Using the financial statement effects template, record separately the 2018 warranty liability transactions relating to the (1) "Warranties issued during the period," (2) "Recalls and changes to preexisting warranty obligations," and (3) "Settlements made during the period." Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. ($ 000s) Transaction 1. 2. 3. N/A N/A Cashi Cash Asset 0✓ 수 ✓N/A 0✔ ◆ ✔ N/A 2018 2017 2016 $92,316 $77,892 $72,733 52,300 56,677 59,011 (77,714)…
M6-17 Explaining Revenue Recognition and Bundled Sales A.J. Smith Electronics is a retail consumer electronics company that also sells extended warranty contracts for many of the products that it carries. The extended warranty provides coverage for three years beyond the expiration of the manufacturer’s warranty. In 2016, A.J. Smith sold extended warranties amounting to $1,700,000. The warranty coverage for all of these begins in 2017 and runs through 2019. The total expected cost of providing warranty services on these contracts is $500,000. a. How should A.J. Smith recognize revenue on the extended warranty contracts? b. Estimate the revenue, expense, and gross proﬁt reported from these contracts in the year(s) that the revenue is recognized. c. In 2017, as a special promotion, A.J. Smith sold a digital camera (retail price $300), a digital photo printer (retail price $125), and an extended warranty contract for each (total retail price $75) as a package for a special price of $399.…
A partial amortization schedule for a 5-year note payable that Mabry Company issued on January 1, 2018, is shown as follows. accounting period principal balance cash payment app. to interest app to principal 2018 136000 34965 12240 22725 2019 113275 34965 10195 24770 2020 88505 34965 7965 27000 what is the amount of interest expense on the loan?
65. Borrowed P100,000 by issuing a 1-year note with 7% annual interest to Century Savings Bank on October 1, 2021. What is the adjusting entry on December 31, 2021? A. Debit: Interest Expense and Credit: Interest Payable P1,750 B. Debit: Interest Expense and Credit. Interest Payable P7,000 C. Debit: Interest Expense and Credit: Interest Payable P3,500 D. Debit: Interest Expense and Credit: Interest Payable P5,250
Accrued Product Warranty Lachgar Industries disclosed estimated product warranty payable for comparative years as follows: (in millions) Current estimated product warranty payable Noncurrent estimated product warranty payable Total Year 2 Feedback $14,903 9,065 $23,968 X Presume that Lachgar's sales were $194,201 million in Year 2 and that the total paid on warranty claims during Year 2 was $15,364 million. ▼ Check My Work Review the need for a classified balance sheet. Year 1 a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash demands business relative to the quick current assets and other longer-term demands $14,289 7,989 $22,278 b. Provide the journal entry for the Year 2 product warranty expense. If an amount box does not require an entry, leave it blank. Product Warranty Expense Product Warranty Payable X on the
Required information Exercise 8-15A Record warranties over two years (LO8-5) [The following information applies to the questions displayed below.) Lindy Appliance begins operations in 2021 and offers a one-year warranty on all products sold. Total appliance sales in 2022 are $25,000. Also in 2022, Lindy has additional sales of $2,400,000 and revises its estimate of warranty costs associated with sales in 2022 to be 1.5%. Exercise 8-15A Part 4 4. What is the balance in Warranty Llability at the end of 2021 and 2022? Answer is complete but not entirely correct. 2022 7.000 Os 29,000 2021 Warranty Liobility s