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Hi Guys,
Can someone please help me understand where they get some of the solution:
in the Statement of profit or loss:
Where do they get the 15 for warranty?in the Statement of financial position:
Where do they get the 3 for accrued interest which is added to the payables?Thanks
Rabia1. The warranty provision account had a balance of $90,000 before making the annual adjustments. At the year end, it was estimated that warranty provision should be $75,000. Therefore, to bring the account balance to $75,000 we will need to reduce the account balance by $75,000. The entry will be:
Dr Warranty Provision $15,000
Cr SOPL $15,0002. The 10% annual interest payable on the loan notes is $8,000. So far, $5,000 have already been paid, meaning that an additional $3,000 are accrued.
Hope this helps.
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