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Gemiola [76]
3 years ago
12

East Corp. manufactures stereo systems that carry a two-year warranty against defects. Based on past experience, warranty costs

are estimated at 4% of sales for the warranty period. During 2005, stereo system sales totaled $3,000,000, and warranty costs of $67,500 were incurred. In its income statement for the year ended December 31, 2005, East should report warranty expense of:
A. $52,500

B. $60,000

C. $67,500

D. $120,000
Business
1 answer:
11Alexandr11 [23.1K]3 years ago
7 0

Answer:

$52,500

Explanation:

Warranty cost are the cost associated with the repair or replacement of a product in case it does not perform as intended after purchase.

It is debited to the warranty expenses account and credited to the warranty liability account.

Total sales for the year - $3,000,000

Warranty estimate basis - 4%

Estimated warranty - 3,000,000 * 4% = $120,000

Warranty cost incurred = $67,500

Balance to be recorded for the year = 120,000 -67,500

$52,500

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The information necessary for preparing the 2018 year-end adjusting entries for Winter Storage appears below. Winter's fiscal ye
natima [27]

Answer:

Adjusting entries are entries that indicate the events of the company that have occurred but not yet recorded by the company.

a. DATE          DESCRIPTION                    DEBIT        CREDIT

Dec 31         Depreciation Expenses        $7,000

2018            Accumulated Expenses                             $7,000

                 (Record depreciation on equipment )

b. DATE          DESCRIPTION                    DEBIT        CREDIT

Dec 31         Salary expenses                   $3,400

2018             Salary payable                                          $3,400

             (Record salary incurred but not paid)

c. DATE          DESCRIPTION                    DEBIT        CREDIT

Dec 31            Interest receivables            $660

2018               (12,000 * 6% * 11/12)

                      Interest revenue                                         $660

                     (Record of interest earned)

d. DATE          DESCRIPTION                    DEBIT        CREDIT

Dec 31           Insurance Expenses             $11,250

2018              (15,000 * 9/12)

                     Prepaid Insurance                                   $11,250

                     (Record payment of insurance expenses)

e. DATE          DESCRIPTION                    DEBIT        CREDIT

Dec 31.           Supplies Expenses               $1,500

2018               Supplies                                                   $1,500

                      (Record of supplies)

f. DATE          DESCRIPTION                    DEBIT        CREDIT

Dec 31,          Deferred revenue               $1,400

2018              (4,200 * 2 month / 6 month)

                     Service revenue                                     $1,400

                    (Record advance payment for services provided)

g. DATE          DESCRIPTION                    DEBIT        CREDIT

Dec 31,           Advertisement Expenses    $1,000

2018               Prepaid Advertisement                          $1,000

                     (Record payment for advertisement)

3 0
2 years ago
When looking for capital, bankers and other lenders will usually feel most comfortable investing in a/an
lilavasa [31]
Existing business with a proven record. When you ask for investments, the lending institution will most definitely ask for your financial track record. They would want to know if you are a good paymaster because they will need the assurance that you can pay them back. Even if you have a really original idea and want to start a new business, there will still be some reservation if you have no track record because the lenders do not know if you are trustworthy or not. Unlike if you already have a proven record that you are a good paymaster, then you at least have proof that you can pay back. 
7 0
2 years ago
A manufacturing company has a beginning finished goods inventory of $15,400, raw material purchases of $18,800, cost of goods ma
cupoosta [38]

Answer:

$30,900

Explanation:

The beginning finished goods is $15,400

Raw materials purchased is $18,800

The cost of goods manufactured is $34,100

Ending finished goods is $18,600

Therefore the cost of gods can be calculated as follows

= 15,400+34,100-18,600

= 49,500-18,600

= 30,900

Hence the cost of goods sold by the company is $30,900

8 0
3 years ago
Suppose that the demand for steel in Japan is given by the equation Qd S = 1200 – 4PS + PA + PT, where QS is the quantity of ste
timurjin [86]

Answer: See explanation below for answer.

Explanation:

a) In equilibrium the quantity supplied will equal the quantity demanded in all three markets. Algebraically this implies:

Qd S = Qs S

Qd A = Qs A

Qd T = Qs T

Substituting in the given curves implies:

1200 - 4PS + PA + PT = 4PS

1200 - 4PA + PS + PT = 4PA

1200 - 4PT + PS + PA = 4PT

Solving the first equation for PT and substituting into the second equation implies:

1200 - 4PA + PS + (8PS - PA - 1200) = 4PA

9PS = 9PA

Cancel 9 on both sides, we have:

=> PS = PA

Substituting these results into the third equation implies:

1200 - 4(8PA - PA - 1200) + PA + PA = 4(8PA - PA - 1200)

=> 10800 = 54PA

=> PA = 200

At:

PA = 200

PS = 200

PT = 200

The equilibrium quantities are:

QA = 800

QS = 800

QT = 800

b) Substituting the new supply curve for steel into the equilibrium condition, we have:

1200 - 4PS + PA + PT = PS

1200 - 4PA + PS + PT = 4PA

1200 - 4PT + PS + PA = 4PT

Again solving for PT in the first equation and substituting into the second equation, we have:

1200 - 4PA + PS + (5PS - PA - 1200) = 4PA

=> 6PS = 9PA

=> PS = 1.5PA

Substituting these results into the third equation, we have:

1200 - 4(5(1.5PA) - PA - 1200) + 1.5PA + PA = 4(5(1.5PA) - PA - 1200)

=> 10800 = 49.5PA

=> PA = 218.18

At:

PA = 218.18

PS = 327.27

PT = 218.18

At these prices, the equilibrium quantities are:

QA = 872.72

QS = 327.27

QT = 872.72

The shift in the supply of steel raises the equilibrium price for all three goods, lowering the equilibrium quantity of steel and raising the equilibrium quantities of aluminum and titanium. This last effect comes as a result of the demand curves for aluminum and titanium increasing in response to the shift in the steel supply curve.

c) Returning to the original equilibrium, this shift in the demand for aluminum implies:

1200 - 4PS + PA + PT = 4PS

1500 - 4PA + PS + PT = 4PA

1200 - 4PT + PS + PA = 4PT

Solving the first equation for PT and substituting into the second equation, we have:

1500 - 4PA + PS + (8PS - PA - 1200) = 4PA

=> 9PS + 300 = 9PA

=> PS = PA - 33.33

Substituting these results into the third equation, we have:

1200 - 4(8(PA - 33.33) - PA - 1200) + (PA - 33.33) + PA = 4(8(PA - 33.33) - PA - 1200)

=> 12900 = 54PA

=> PA = 238.89

At:

PA = 238.89

PS = 205.56

PT = 205.56

At these prices, the equilibrium quantities are:

QA = 955.56

QS = 822.24

QT = 822.24

An increase in the demand for aluminum will raise the equilibrium prices and quantities in all three markets. The price and quantity in the steel and aluminum industries increase because as the price of aluminum rises, the demand for steel and titanium increases.

5 0
3 years ago
"Another term for online word-of-mouth marketing is ________, which refers to the transmission of messages in much the same way
Sergeu [11.5K]

Answer:

The correct answer is letter "B": viral marketing.

Explanation:

Word-of-mouth marketing or viral marketing is the type of advertising consumers make of a product or service based on their own experiences. They could represent a benefit or a risk for the company of the product in reference since the comments being spread about it are based on subjective ideas.  

Comments of people with a certain degree of influencing others are likely to affect more a firm's sales negatively or positively.

6 0
3 years ago
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