3 4 QUESTION 1 WARRANTIES (10 marks) A B D E F G H Powerful Blenders Ltd. is a manufacturer and dealer of high quality blenders. Each blender comes with a standard two year warranty against any hardware repairs. Powerful Blenders has a December year-end. Assume all sales of blenders occurred on February 1, 2020 and no other sales of blenders occurred during the year. Additional data relating to the warranty contracts follows: # of blenders sold on February 1, 2020 in cash Sales price per blender Inventory cost of blender $ $ 1,800 700 200 5 6 7 8 9 10 11 12 13 14 15 16 Total estimated costs servicing warranties per blender: $ 150 Total repair costs incurred in 2020 for blenders under warranty Labour $ 82,000 Parts $ 100,000 17 (1). Prepare ALL appropriate journal entries relating to the product sale and warranty contracts for 2020. Use the drop-down boxes for account names. Use the entry description to help record the appropriate entry, If no entry is needed, select N/A from the first line. All journal entries must 18 have debits listed before credits. 19 Date Account Title Debit Credit Feb. 1/20 1 Sale of blenders Feb. 1/20 Cost of Blenders Feb. 1/20 Warranty 2 = Cover Sheet Q1 Q2 Q3 04 05 06 + pion Mode: Automatic Workbook Statistics 23 Feb. 1/20 24 Cost of Blenders 25 26 Feb. 1/20 27 Warranty 28 29 30 Dec. 31/20 31 Repair costs incurred 32 33 34 (2). What is the appropriate liability account and related dollar amount to be presented on Powerful Blenders Ltd, December 31, 2020 balance 5 sheet? Use the drop-down boxes to select the appropriate account name and classification. 6 Classification Account name Amount ($) (3). What amount of warranty revenue would Powerful Blenders' report on its December 31, 2020 income statement associated with the warranty contracts? Put your dollar amount in the blue box below. Amount (5) 4). Now assume Powerful Blenders Ltd, provided the two-year warranty as a separate service at an extra selling price of $300 per warranty contract. Assume only 720 separate warranty contracts were sold. All other information remains the same from above. What amount of warra expense would appear on the income statement for the year ending December 31, 2020? Account name Amount ($) Warranty expense 3 Cover Sheet Q1 Q2 Q3 04 05 06 + Mode: Automatic Workbook Statistics