A. How much warranty expense will Anderson incur in 2017? B. What is the balance
ID: 2550061 • Letter: A
Question
A. How much warranty expense will Anderson incur in 2017? B. What is the balance of Anderson's warranty payable at December 31, 2017? C. How much warranty expense will Anderson incur in 2018? (3 ) Anderson Co. sold equipment to Walter Farms for $35,000 on March 1, 2017. Anderson sold the equipment with a two-year warranty. Anderson anticipated warranty costs on its equipment to be 2% of the sales value. On February 26, 2017, walter incurred equipment repairs of $450 that were covered by Anderson's warranty. A. How much warranty expense will Anderson incur in 2017? B. what is the balance of Anderson's warranty payable at December 31, 2017? C. How much warranty expense will Anderson incur in 2018? D. Given only the above, what is the balance of Anderson's warranty payable at December 31, 2018?Explanation / Answer
Sales of the year 2017 = $ 35,000 Provision of Warranty Expenses = 2% of $ 35,000 = $ 700 Answer =A) Warranty Expenses of the year 2017 = $ 450 (Equipment Repair of $ 450 cost is taken as expenses of the year) Answer = B) Total Provision for warranty Payable = $ 700 Less: Expenses of the year 2017 = $ 450.00 Balance to be Payable at December 31, 2017 = $ 250 Answer = C) Warranty expenses of the year 2018 is not given so we cannot idetify the same in So warranty expenses of the year 2018 is not be identiafiable due to lack of the information Answer = D) If there is no expesnes or part consumption incurred in the year 2017 than we have to write back the provision made earlier in the year 2017 and transfer the same in income and there is zero warranty payable So, Answer = Warranty payable at the year end December 31, 2018 is Zero.
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