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Charra [1.4K]
3 years ago
12

Cupola Awning Corporation introduced a new line of commercial awnings in 2016 that carry a two-year warranty against manufacture

rs defects. Based on their experience, warranty costs are expected to be 5% of sales. Sales and actual warranty expenditures for the first year of selling the product were:
sales = 5,000,000 and actual warranty expenditures = 37,500.

Required:

1) Does this situation represent a loss contingency? how should Cupola account for it?
Business
2 answers:
Kaylis [27]3 years ago
7 0

Answer:

Yes this is a loss contingency.

when it is still an estimate then Debit warranty Expense and Credit provision for warrant liability and when it actually incurs; Debit the Provision for warranty liability and credit Bank.

estimate ; Debit warrant loss 250,000, Credit provision for warranty 250000

actual ; Debit provision for warranty loss 37500, Credit bank

Explanation:

this situation gives rise to a loss contingency because it is a provision for a adverse future event.

The first entry to the estimation is a creation of the liability and the second entry is the actual payment

5000000*0.05= 250000

Alex_Xolod [135]3 years ago
4 0

Answer:

warranty expense 250,000 debit

         waranty liability    250,000 credit

warranty liaiblity     37,500 debit

                 cash               37,500 credit

Explanation:

The warranty expense will be 5% of sales

5,000,000 x 5% = 250,000

We will create a liability to represent the future expenses and when they occur we decrease the warrant liability.

As we already declare the associate warranty expense based on sale the expenditures o ot generate an expense.

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In order to determine the average variable cost, the firm's variable costs are divided by _______________________.
emmasim [6.3K]

Answer:

total output.

Explanation:

for example, a company manufactures 10,000 units of A. Its total variable costs are $50,000, and its total fixed costs are $25,000.

The average variable cost = $50,000 / 10,000 = $5 per unit of A

The average fixed cost = $25,000 / 10,000 = $2.50 per unit of A

The average total cost = $75,000 / 10,000 = $7.50 per unit of A

3 0
3 years ago
a nurse teaches a client who is being discharge home. the client has a t-tube after an open cholecystectomy. which statement mad
DerKrebs [107]

Answer:

The statement made by the client that I need or require a diet which do not have a lot of fatty foods

Explanation:

After the cholecystectomy, the client or the patient need or require a diet which is nutritious and does not have the excess fat, otherwise a special or a particular diet is not stated for most of the clients.

Under this, the client require to have a good fluid intake, that is healthy for all the people though it is not related to the surgery.

And drinking fluids among the meals helps with the dumping syndrome and the restriction of the sweets is not necessary.

3 0
3 years ago
Zhang Industries sells a product for $750. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang
Colt1911 [192]

Answer:

Total= $292,520

Explanation:

Giving the following information:

Zhang Industries sells a product for $750. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang pays a sales manager a monthly salary of $4,000 and a commission of 2% of sales in dollars. Assume 30% of Zhang's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale.

Cash budget for June:

Sales= [(400*1.03)*750]*0.3= 92,700

Sales from May= (400*750)*0.7= 210,000

Salary= (4,000)

Commision= [(400*1.03)*750]*0.02= (6,180)

Total= $292,520

6 0
3 years ago
If the government owes $10.0 trillion and then borrows $700 billion more this year, this leads toa. a debt of $700 billion and a
77julia77 [94]

Answer:

E:  a debt of $10.7 trillion and a deficit of zero.

Explanation:

Deficits are usually financed by debt. Here the government has incurred an extra debt of $700 billion. The previous debt of $10 trillion may have been due to any reason and not necessarily deficit. However, the passage does not state if the extra debt is due to deficit or not. So it is safe to select option E.

Hence, the government has incurred a total debt of $10.7 trillion and a deficit of zero.

7 0
3 years ago
Roth Service Co. experienced the following transactions for 2018, its first year of operations: Provided $82,000 of services on
frosja888 [35]

please find the attached for the answer

Download docx
5 0
2 years ago
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