Warranty Costs Brigham Company sells an electric timer that carries a 60-day unconditional warranty against product failure. Based on a reliable statistical analysis, Brigham knows that between the sale and the end of the product warranty period, three percent of the units sold will require repair at an average cost of $105 per unit. The following data reflect Brigham's recent experience: Units sold Known product failures from sales in: October November December October November December Dec. 31 Total 54,000 51,000 67,500 172,500 480 825 345 315 540 615 Calculate the estimated liability for product warranties at December 31. $ 1,620 885 615
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- Warranty CostsMilford Company sells a motor that carries a three-month unconditional warranty against product failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end of the product warranty period, four percent of the units sold will require repair at an average cost of $60 per unit. The following data reflect Milford’s recent experience: October November December Dec. 31 Total Units sold 23,000 22,000 25,000 70,000 Known product failures from sales in: October 120 180 160 460 November 130 220 350 December 210 210 Calculate, and prepare a journal entry to record, the estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records. General Journal Date Description Debit Credit Dec.31 AnswerProduct Warranty ExpenseEstimated Liability for Product Warranty Answer Answer AnswerProduct Warranty ExpenseEstimated…Sea Port Company sells a product that carries a 60-day unconditional warranty against product failure. Based on statistical analysis, Sea Port knows that between the time of sale and the lapse of the warranty, 4% of the units sold will fail and require repair at an avenge cost of $40 per unit. The following data reflect the first three months during which the product was sold. October November December Units sold 30,000 36,000 60,000 Known units of product failure From sales of October 480 600 120 November 300 960 December 900 Prepare the general journal entry to record Sea Port’s estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records.Modem Appliances, Inc. sells food processors for $150 with a 120-day warranty against defects. Past experience indicates that 5% of the processors will have some defect during the warranty period and that the necessary repairs and adjustments will cost $25 per defective unit. Sales for August are $225,000. What is the estimated liability for product warranties for units sold in August? Select one: a. $3,000 b. $1,800 C. $11,250 d. $1,875 e. None of the above
- .Pirates PLC sells a line of goods under a six-month warranty. Any defect arising during that period is repaired free of charge. Pirates PLC has calculated that if all the goods sold in the last six months of the year required repairs the cost would be $2 million. If all of these goods had more serious faults and had to be replaced the cost would be $6 millionThe normal pattern is that 80% of goods sold will be fault-free, 15% will require repairs and 5% will have to be replaced. What is the amount of the provision required? Select one alternative: $1.6 million $6 million $2 million $0.6 millionA company sells goods with a warranty for the cost of repairs required in the first 1 month after purchase. Past experience of suggests: stion i) 85% of the goods sold will have no defects ii) 8% will have minor defects iii)7% will have major defects If minor defects were detected in all products sold, the cost of repairs will be OMR 66,000; if major defects were detected in all products sold, the cost would be OMR 272,000. What amount of provision should be made? OMR 50,700 OMR 24,320 OMR 26,380 个 None of themBramble Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Bramble estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $20. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month Units Sold Units Defective Prior to December 31 November 32,000 640 December 34,000 425 (a) Prepare the journal entry to record the costs incurred in honoring 1,065 warranty claims. (Assume actual costs of $21,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
- Bramble Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Bramble estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $20. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month Units Sold Units Defective Prior to December 31 November 32,000 640 December 34,000 425 (a) Your Answer Correct Answer Your answer is partially correct. Prepare the journal entry to record the costs incurred in honoring 1,065 warranty claims. (Assume actual costs of $21,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Warranty Expense 21,300 Notes Payable 21,300Coronado Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Coronado estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $25. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month November December (a) Units Sold 31,600 33,600 Units Defective Prior to December 31 632 Account Titles and Explanation 420 Prepare the journal entry to record the costs incurred in honoring 1,052 warranty claims. (Assume actual costs of $26,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit CreditAria Perfume, Inc., sold 3,210 boxes of white musk soap during January of 2018 at the price of $90 per box. Thecompany offers a full refund to unsatisfied customers for any product returned within 30 days from the date ofpurchase. Based on historical experience, Aria expects that 3% of sales will be returned. How many performanceobligations are there in each sale of a box of soap? How much revenue should Aria recognize in January?
- Grouper Taco Palace sells 280 gift cards at $50 per gift card and 140 of the gift cards are redeemed by year-end. Grouper estimates that it will have 10% breakage on its gift cards. Prepare the entry for the gift card redemption and the expected breakage for the gift cards in the current year. (Ignore Cost of Goods Sold.) (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. Round intermediate calculations to 4 decimal places, e.g. 0.2456 and final answers to 0 decimal places, e.g. 5,125) Account Titles and Explanation Debit CreditAria Perfume, Incorporated, sold 2,430 boxes of white musk soap during January of 2024 at the price of $80 per box. The company offers a full refund to unsatisfied customers for any product returned within 30 days from the date of purchase. Based on historical experience, Aria expects that 3% of sales will be returned. How many performance obligations are there in each sale of a box of soap? How much revenue, sales returns, and net revenue should Aria recognize in January?3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against product defects. Experience indicates that four percent of the units sold will prove defective, requiring an average repair cost of $50 per unit. During the first month of business, product sales were $320,000, and 20 of the units sold were found to be defective and repaired during the month. What is the accrued liability for product warranties at month-end? a $1,000 b. $600 c. $1,600 d. $2,000