Green\'s Global Geodesic Software, a sole proprietorship, is sold with a 1 year

Question

Green's Global Geodesic Software, a sole proprietorship, is sold with a 1 year replacement warranty which is recognized by accruing 10% of the sale price of the product. The warranty accrual is the sole current liability of the company. At the opening of the year, there was a balance of $100,000 in the warranty accrual. During the year claims of $102,000 were made as were sales of $1,200,000. Please provide the following: A workpaper that displays the account changes leading to ending balances for the warranty accrual and warranty expense. Prepare the footnote for accrued liabilities.

Explanation / Answer

1. Working paper

2. Foot Note:

During the year the company has created additional provision of $120000 for warranty accrual and has also recognised warranty claims of $102000 as warranty expenses as a result of which closing balance in warranty accrual account comes out to be $118000 .

Opening balance $100000 Add: Liability vreated durin the year 120000 Less: Warranty expenses 102000 Closing balance of warranty accrual 118000

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.