Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At the end of 2014, Spin Master Toys has a balance of $76,000 in the warranty ability account, and $70,000 in unearned revenue. Unearned revenue

At the end of 2014, Spin Master Toys has a balance of $76,000 in the warranty ability account, and $70,000 in unearned revenue. Unearned revenue consists of one job, paid for by George Hemphill. These balances were all correctly calculated. Transactions in 2015 are summarized as follows: 1. Work was completed and delivered to George Hemphill, who had paid in full in advance. There was no warranty associated with this job. 2. Customers made deposits of $67,000 on work that will be carried out in the next fiscal period. 3. Sales of $4,700,000 were recorded for goods that carried a warranty. Warranty work is estimated to cost 2% of sales 4. Warranty claims were made during the year. Spin Master Toys spent $20,000 on parts and $65,000 in labour on warranty work Please make sure your final answer(s) are accurate to the nearest whole number a) List the amount of the service revenue that would appear on the 2015 income statement. The warranty revenue cannot be jeparately identified. Service revenue- b) List the balance of the warranty expense account that would appear on the 2015 income statement as a result of the 2015 transactions. Warranty expense $ c) What amount should be reported on the 2015 balance sheet for warranty lability? Warranty liability-S d) What amount should be reported on the 2015 balance sheet for uneamed revenue? Unearned revenue-5

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Strategy In Managerial Accounting

Authors: Shahid Ansari

1st Edition

0256256225, 978-0256256222

More Books

Students also viewed these Accounting questions