What amount should sam record as warranty expense

Reference no: EM131977302

Problem

Specialty Appliances and More, Inc. (SAM) has a three-year warranty on their solar refrigerators for defects. Warranty costs are estimated at 2% of sales in year one (the year of the sale), and 5% of sales in each of the following two years. The warranty expires at the end of the third year. Annual sales and actual warranty repair costs were as follows:

	sales	Actual Warranty Cost
year 1	$275,000	$27,500
year 2	$350,000	$17,500
year 3	$425,000	$30,000
total	$1,050,000	$75,000

What amount should SAM record as warranty expense in the first three years?

Reference no: EM131977302

Questions Cloud

Calculate the number of runs per year : The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 240 per day.

Cylinder turns on frictionless bearings : A crank with a turning radius of 0.25 m is attached to the end of the cylinder. What minimum force directed perpendicular to the crank handle

What is the future value of an ordinary annuity cash flow : What is the future value in 4 years of an ordinary annuity cash flow of $942 every quarter of a year at the end of the period at an annual interest rate of 8.79

What would be the radius of that object : The nuclear density is 1.174 × 1017 kg/m3 and the mass of the Sun is 1.99 × 1030 kg. Answer in units of km.

What amount should sam record as warranty expense : Warranty costs are estimated at 2% of sales in year one (the year of the sale). What amount should SAM record as warranty expense in the first three years?

What is the amount of payment that the woman will receive : Fully amortized loan (annual payments for principal and interest with the same amount each? year). Chuck Ponzi has talked an elderly woman into loaning him.

Submit the Profit and Loss Statement report : MYOB Case Study Assignment - Submit the following reports - Balance Sheet, Profit and Loss Statement and Cash Receipts journal

Summarizes one of the hands-on simulations : Describe your thoughts about whether the processes that you followed to complete the activities would influence your choice of operating systems.

Composition of the earth interior : What do the seismic waves generated by earthquakes reveal about the composition of the Earth's interior? Explain the reasoning behind this inference.

User Account

All Pages