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Flauer [41]
3 years ago
13

Milford Company sells a motor that carries a three-month unconditional warranty against product failure. Based on a reliable sta

tistical analysis, Milford knows that between the sale and the end of the product warranty period, two percent of the units sold will require repair at an average cost of $50 per unit. The following data reflect Milford's recent experience:
Oct Nov Dec Dec 31 Total
Units unsold 24000 26000 26000 76000
Known products failure from sales in:
October 130 190 170 490
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.
Business
1 answer:
Solnce55 [7]3 years ago
3 0

Answer: See explanation

Explanation:

Number of units sold = 76000

Percentage repair= 2%

Estimated defective units = Percentage repair × Units sold = 2% × 76000 = 1520

Actual defective units = 490 + 350 + 210 = 1050

Unclaimed warranty = Estimated defective units - Actual defective units = 1520 - 1050 = 470

Repair cost = $50

Warranty expense = 470 × $50 = $23500

The journal entry will then be:

31 December:

Debit: Product warranty expense = $23500

Credit: Estimated liability for product warranty = $23500

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All else being equal, a company with a low operating leverage will have:
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Answer:

c) relatively high variable costs

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Operating leverage is a ratio that is used to analyze and understand the cost structure of a business. It gives the relation between the variable and fixed cost to the the total cost of running the business.

A business with a large amount of fixed cost relative to variable is said to have  a high operating leverage . For such business, operating income would  be more volatile because the operating income would not increase in commensurate proportion as sales revenue.

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Halimbawa, ang mga bata at guro ay maaaring magtabi ng isang oras bawat linggo upang malinis at maiwaksi ang silid aralan. Ang mga guro at iba pang kawani ay maaaring maghugas ng kanilang mga tasa ng kape at baso pagkatapos magamit, at punasan ang anumang pagkalat o gulo na ginawa nila.

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3 years ago
ABC Corporation had a 1/1/20 balance in the Allowance for Doubtful Accounts of $40,000. During 2020, it wrote off $28,800 of acc
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Answer:

$20,400

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Ending balance of Allowance for Uncollectible Accounts = Beginning balance of Allowance for Uncollectible Accounts + bad debts -write off amount

where,

Ending balance of allowance for uncollected accounts is

= $800,000 × 5%

= $40,000

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Answer:

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8 0
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