Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Beartooth Appliances sells televisions for $1,900 each, which includes a 2-year assurance-type warranty that requires the company to perform periodic services and to replace defective

Beartooth Appliances sells televisions for $1,900 each, which includes a 2-year assurance-type warranty that requires the company to perform periodic services and to replace defective parts. During 2020, Beartooth sold 600 televisions for cash. Based on experience, the company has estimated the total 2-year warranty costs to be $40. (Assume sales all occur on December 31, 2020.) In 2021, Beartooth Company incurred actual warranty costs relative to 2020 television sales of $13,000. Beartooth also sells a five-year extended warranty for $300. Warranty expenditures are assumed to be zero in the first two years (since the assurance-type warranty covers these repairs) and then evenly over the final three years. Of the 600 televisions sold in 2020, half the customers purchased the extended warranty. During 2023, Beartooth incurred $22,000 in warranty costs related to the 2020 television sales and the extended warranty. Beartooth Corporation follows IFRS.


Instructions 

Prepare the entries for the sale of the televisions, including both warranties. Prepare the entry for 2021 warranty costs. Use a date of May 30. Prepare the 2023 entry for the warranty costs (use a date of May 30) and the December 31, 2023, adjusting entry for the extended warranty.


Step by Step Solution

3.22 Rating (149 Votes )

There are 3 Steps involved in it

Step: 1

Date Particulars Debit Credit 31Dec21 Cash 1140000 Sales 114000... 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

College Mathematics for Business Economics Life Sciences and Social Sciences

Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen

12th edition

321614003, 978-0321614001

More Books

Students also viewed these Accounting questions

Question

What is the Antebellum Interregional growth hypothesis?

Answered: 1 week ago