Question

From where did they get the 15?

Please show work when solving

8.4 Account for accrued liabilities and unearned revenue 3 of 22 (7 complete) 7 c QC8-9 (similar tol Help Me Solve This Adventure defective an defective un d w Question Help 4% of the units sold will prove defective and require an average repair cost of $45 per unit. total sales were 900 units; by the end of the month, twenty - two defective units had been repaired. The liability for product warranties at ng Co. was organized to sell a single product that carries a 45-day warranty against defects. Engineering estimates indicate that During Camping's first month of operations aguigThe liability OB. $1,9 C. $2. month-end should be O D. $3, Given that this is the first month of operations for Car 15x $45? not a beginning balance in the account. Therefore, the balance of the liability accounit at e enu or ue month will be the difference between the warranty expense recorded and the cost of the repairs made. Camping made airs consisiting of 15 defective units by the end of the month at the average repair cost of $45. Use the formula below to calculate the balance of the Accrued Warranties Payable account. Accrued Warranties Payable Repairs made Accrued warranties payable Warranty expense 675 945 1,620 This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close ick to sele l narts sh

Answer 1

In the first part it is mentioned that by the end of the month 22 units were repaired, whereas in the second part it is mentioned that 15 unit were repaired by the end of the month. There appears to be a disconnect hence the solution is being provided for both options

Option A: 22 units were repaired

1. Estimated defective units = 900 x 4% = 36

Warranty Expense (36 x $45) Dr. $1,620

Estimated Warranty Liability Cr.  $1,620

2. Warranty costs incurred for 22 units

Estimated Warranty Liability (22 x 45) Dr. $990

Cash.................................................. Cr. $990

Balance of Accrued Warranty Payable = $1,620 -$990 =$ 630

Option B: 15 units were repaired

1. Estimated defective units = 900 x 4% = 36

Warranty Expense (36 x $45) Dr. $1,620

Estimated Warranty Liability Cr.  $1,620

2. Warranty costs incurred for 15 units

Estimated Warranty Liability (15 x 45) Dr. $675

Cash.................................................. Cr. $675

Balance of Accrued Warranty Payable = $1,620 -$675 =$ 945