$1,200 Use the horizontal model (or write the journal entry) to show the effects
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$1,200 Use the horizontal model (or write the journal entry) to show the effects of t accrual on June 25, 2016. Required: Other accrued liabilities-warranties The balance of the Estimated Warranty ability account was $25,000 on January 1,2016, and $34,400 on December 31,2016 Based on an analysis of warranty claims during the past several years, this year's war ranty provision was established at 1.5% of sales, and sales during the year w Li Mini-Exercise 7.3 LO 5 ere $2,600,000 Required: hat amount of warranty expense will appear on the income statement for the year ended December 31, 2016? a. W b. What were the actual costs of servicing products under warranty during the year? Mini-Exercise Bonds payable-various issues On July 1, 2016, $12 million face amount of 7.4 7%, 10-year bonds were issued. The bonds pay interest on an annual basis on June LO 8 30 each year. The market interest rates were slightly higher than 7% when the bonds were sold. Required: a. How much interest will be paid annually on these bonds? b. Were the bonds issued at a premium or discount? Explain. c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? Explain your answer.Explanation / Answer
Exercise 7-3 Amount of Warrnty Expenses for the year 2016 Warrnaty expenses =Sales * Warranty Persentage =$2600,000*1.5% =39000 Actual cost of serviceing Products for the year 2016 Amount in $ Opening Warranty Liability 2016 25000 Add: Warrnaty expenses provided 2016 39000 Less: Closing Warranty Liability 2016 -34400 Actual Cost of Servicing products for the year 2016 29600
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