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Posted: July 8th, 2023
St. Xavier ACCT 401 Other accrued liabilitiesâwarranties Prist Co. had not provided a warranty on
Other accrued liabilitiesâwarranties Prist Co. had not provided a warranty onits products, but competitive pressures forced management to add this feature at thebeginning of 2013. Based on an analysis of customer complaints made over the pasttwo years, the cost of a warranty program was estimated at 0.3% of sales. During2013, sales totaled $3,450,000. Actual costs of servicing products under warrantytotaled $9,700.Required:a. Use the horizontal model (or a T-account of the Estimated Warranty Liability) toshow the effect of having the warranty program during 2013.b. What type of accrual adjustment should be made at the end of 2013?c. Describe how the amount of the accrual adjustment could be determined.
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