1. During 2016, how much cash was collected from the sale of extended warranties?

2. For 2016, what was the journal entry made to record the amount paid to fix items under the embedded or standard warranty?

3. When IBM estimated the amount it needed to record the liability under the standard warranty what journal entry was needed?

4. If an analysis of IBMs experience in having items returned for warranty repairs under the embedded or standard warranty indicated that the estimate needed to be $45 million higher than is shown above, what journal entry would be needed?

5. What would happen to the current ratio and return on investment with the journal entry in #4 Up, Down, or Stay the Same?

Standard Warranty Liability s in miljion) Balance at January 1 Current period accruals Accrual adjus tments to reflect 2016 $181 145 2015 $ 197 173 experience Charges incurred Balance at December 31 164) $156 7 (196) $ 181 Extended Warranty Liability (Deferred Income) S in milliona) 2016 2015 5 538 536 Balance at January 1 Revenue deferred for new extended warranty contracts Amortization ofdeferred revenue Other Balance at December 31 263 (267) 286 (253) (31) $ 531 $538