North Boulder USA, a tire manufacturer, guarantees its tires against defects for five years or 60,000 miles,

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North Boulder USA, a tire manufacturer, guarantees its tires against defects for five years or 60,000 miles, whichever comes first. Suppose North Boulder USA can expect warranty costs during the five-year period to add up to 3% of sales. Assume that a North Boulder USA dealer in Denver, Colorado, made sales of $641,000 during 2018. North Boulder USA received cash for 15% of the sales and took notes receivable for the remainder. Payments to satisfy customer warranty claims totaled $18,500 during 2018.

1. Record the sales, warranty expense, and warranty payments for North Boulder USA. Ignore cost of goods sold.

2. Post to the Accrued Warranty Payable T-account. The beginning balance was $14,000. At the end of 2018, how much in accrued warranty payable does North Boulder USA owe to its customers?

Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...
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Financial Accounting

ISBN: 978-0134725987

12th edition

Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

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