PROBLEM 3

On April 1, 2018, Carter Company began offering a new product for sale under a one-year warranty. Of
the 5,000 units in inventory at April 1, 2018, 3,000 had been sold by June 30, 2018. Based on its
experience with similar products, the entity estimated that the average warranty cost per unit sold
would be P160. Actual warranty costs incurred from April 1 through June 30, 2018 were P140,000
On June 30, 2018, the amount to be reported as warranty liability is:

PROBLEM 4
On November 5, 2018, a Sheradez Company truck was in an accident with an auto driven by Joy.
Sheradez received notice on January 15, 2019, of a lawsuit for P4,000,000 damages for personal injuries
suffered by Joy. Sheradez's counsel believes it is probable that Joy will be awarded an estimated amount
in the range between P10,000 and P4,000,000, and no amount is a better estimate of potential liability
than any other amount. The accounting year ends on December 31 and the 2018 financial statements
were issued on March 31, 2019.
What amount of provision should Sheradez accrue at December 31, 2018?