Question
Blossom Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During
Blossom Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2017, the corporation sells for cash423computers at a unit price of $2,380. On the basis of past experience, the 2-year warranty costs are estimated to be $142for parts and $182for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2017.) The warranty is not sold separately from the computer.
Record any necessary journal entries in 2017.(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
What liability relative to these transactions would appear on the December 31, 2017, balance sheet and how would it be classified?
BlossomCorporation
Balance Sheet (Partial)
December 31, 2017
Current Assets
Current Liabilities
Intangible Assets
Long-term Investments
Long-term Liabilities
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
:
$
Current Assets
Current Liabilities
Intangible Assets
Long-term Investments
Long-term Liabilities
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
:
$
SHOW LIST OF ACCOUNTS
In 2018, the actual warranty costs to Blossom Corporation were $21,210for parts and $42,170for labor.
Record any necessary journal entry in 2018.(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
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Advanced Financial Accounting
Authors: Richard Baker, Valdean Lembke, Thomas King, Cynthia Jeffrey
8th Edition
73526916, 978-0073526911
