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SashulF [63]
3 years ago
11

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:
vredina [299]3 years ago
4 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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Answer:

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Answer and Explanation:

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The circular flow of income represents the flow of economic exchanges between economic agents in the economy. If a household provides the labor factor of production, it is paid and uses the same money to purchase from the same firms that produce goods and services. This is a cycle and actually doesn't get more complex than this in real life, only involves alot more firms or economic agents.

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The primary method for sterilizing instruments is
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You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $18,000, $26,500, $46,000,
loris [4]

Answer:

Total PV= $140,465.69

Explanation:

Giving the following information:

Cash flows:

Cf1= $18,000

Cf2= $26,500

Cf3= $46,000

Cf4= $69,000

The appropriate interest rate is 4.3 percent.

<u>To calculate the present value, we need to apply the following formula on each cash flow:</u>

PV= FV/(1+i)^n

Cf1= 18,000/1.043= 17,257.91

Cf2= 26,500/1.043^2= 24,360

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Cf4= 69,000/1.043^4= 58,305.81

Total PV= $140,465.69

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