Climbing Entity (CE) started selling harnesses to mountain climbers around the world in 20X7. In November, 20X8, CE discovered that a buckle on its harnesses was defective and failed when the harness was heavily stressed. FE has a warranty policy against defective harnesses and anticipates (it is more likely than not) that thousands of harnesses will be returned to the entity.
-CE has determined that it needs to recognize a provision relating to the faulty harnesses it sold. Management has assembled the following data:
• Number of harnesses sold - 75,000
• Harnesses anticipated to have no defects - 70%
• Harnesses anticipated to have minor defects - 20%
• Harnesses anticipated to have major defects - 10%
• Management estimates that the cost of repairing each harness with a minor defect is $40 and a major defect $120,
What is CE's journal entry on December 31, 20X8?

Question

Climbing Entity (CE) started selling harnesses to mountain climbers around the world in 20X7. In November, 20X8, CE discovered that a buckle on its harnesses was defective and failed when the harness was heavily stressed. FE has a warranty policy against defective harnesses and anticipates (it is more likely than not) that thousands of harnesses will be returned to the entity.
-CE has determined that it needs to recognize a provision relating to the faulty harnesses it sold. Management has assembled the following data: 
• Number of harnesses sold - 75,000
• Harnesses anticipated to have no defects - 70%
• Harnesses anticipated to have minor defects - 20%
• Harnesses anticipated to have major defects - 10% 
• Management estimates that the cost of repairing each harness with a minor defect is $40 and a major defect $120, 
What is CE's journal entry on December 31, 20X8?

Quizplus · Accepted Answer

The Answer of Climbing Entity (CE) started selling harnesses to mountain climbers around the world in 20X7. In November, 20X8, CE discovered that a buckle on its harnesses was defective and failed when the harness was heavily stressed. FE has a warranty policy against defective harnesses and anticipates (it is more likely than not) that thousands of harnesses will be returned to the entity.
-CE has determined that it needs to recognize a provision relating to the faulty harnesses it sold. Management has assembled the following data: 
• Number of harnesses sold - 75,000
• Harnesses anticipated to have no defects - 70%
• Harnesses anticipated to have minor defects - 20%
• Harnesses anticipated to have major defects - 10% 
• Management estimates that the cost of repairing each harness with a minor defect is $40 and a major defect $120, 
What is CE's journal entry on December 31, 20X8?

Climbing Entity (CE) Started Selling Harnesses to Mountain Climbers Around