EVENLY

Given: 2020 Sale 5,000,000.00 FORD ECOSPORT

2021 Sale 6,000,000.00 FORD RANGER
2 year Warranty

First Year Coverage 4%

2nd Year Coverage 10%
14%
Solution:
Entry 2020 Warranty Expense 700,000.00
Warranty Liability 700,000.00
2021 Warranty Expense 840,000.00
Warranty Liability 840,000.00

2020 2021 2022 2023

Warranty Rate Sales 5,000,000.00 6,000,000.00
2nd Half
First Half Jan to June 2nd Half July to 1st Half Jan to June 2nd Half July to 1st Half Jan to June 2nd Half July to 1st Half Jan to July to Dec
2020 Dec 2020 2021 Dec 2021 2022 Dec 2022 June 2023 2023
4% 2020 first year 4% 100,000.00 50,000.00 50,000.00
10% 2020 2nd year 10% 250,000.00 125,000.00 125,000.00
4% 2021 first year 4% 120,000.00 60,000.00 60,000.00
10% 2022 2nd year 10% 300,000.00 150,000.00 150,000.00
Total Actual Expense 100,000.00 50,000.00 420,000.00 185,000.00 485,000.00 150,000.00 150,000.00 -
Liability Balance at the end of the year 550,000.00 785,000.00 150,000.00 0.00