Question
33) PDQ company sells products that can be paired with extended service warranty contract. During 2020, PDQ sold 100,800 units at a price of
33) PDQ company sells products that can be paired with extended service warranty contract. During 2020, PDQ sold 100,800 units at a price of $599.99. Additionally, PDQ sold 70,000, 3-year warranties at a price of $87 throughout the year. PDQ exepects to be obligated to perform service on 10% of the warranty contracts at an average cost per contract of $210. PDQ settles claims by paying a third-party vendor for repairs. During 2020, PDQ paid $367,500 to said vendor for work performed subject to 2020 warranty contract. (a) Record the sale of the warranty contracts. (b) Record the service provided subject to 2020 contracts. (c) Recognize revenue using the best method available given the data.
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