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How much is the warranty expense to be recognized

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Reference no: EM132869619

Question - ABC Company provides 3-Year warranty for the products it sells. ABC estimates cost of warranty is 2% in the year of sale, 3% a year after and 5% thereafter. As of January 1, 2021, During the year 2021 ABC sold 50,000 units which cost P100 per product and 60,000 unit at the same cost the following year.

Company sells their product at 50% above of their cost and actual warranty cost incurred were P350,000 & P450,000 in 2021 and 2022 respectively.

Required -

1. How much is the warranty expense to be recognized in 2021?

2. How much is the balance of warranty obligation as of December 31, 2021?

3. How much is the balance of warranty obligation as of December 31, 2022?

Reference no: EM132869619

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