70.2K

Verified Solution

Link Copied!

12 Bombardier Inc. specializes in manufacturing transportation products (aircraft, railway equipment, snowmobiles, and watercraft). The company offers warranties on all of its products. Note 2 to Bombardier's financial statements for fiscal year 2018 stated the following: 2 Product warranties typically range from one to five years, except for aircraft structural and bogie warranties that extend up to 20 years. 35 points Selected information from Bombardier's annual reports follows (amounts in millions of U.S. dollars): 2018 2017 2016 Revenues 17,068 18,647 18,192 Provision for product warranties at year-end 1,026 1,133 1,180 200-50-25 During fiscal year 2018, Bombardier paid $425 million to customers in exchange for returned products under the warranty. Required: 1. Compute the amount of warranty expense for fiscal year 2018. (Enter your answer in millions of dollars.) Warranty expenso 2. Prepare journal entries to record both the warranty expense for the year and the payments made under the warranty. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions of dollars.) View transaction list Journal entry worksheet Record payments to customers in exchange for returned products. . Note: Enter debits before credits. : . Transaction General Journal Debit Credit A Record entry Clear entry View general Journal 3-a. Compute the ratio of the warranty liability to revenues for the three years. (Round percentage answers to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) 2018 2017 2016 Ratio of the warranty liability to revenues % % 3-b. Has the ratio increased or decreased during the three-year period? The ratio from 2016 to 2017, and from 2017 to 2018

Answer & Explanation Solved by verified expert

See Answer