Exercise 8-14B Record warranties (LO8-5) [The following information applies to the questions displayed below.) A company...
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Exercise 8-14B Record warranties (LO8-5) [The following information applies to the questions displayed below.) A company restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, the company expects warranty costs to be approximately 5% of sales. Sales for the month of December are $420,000. Actual warranty expenditures in January of the following year were $14,000. Exercise 8-14B Part 1 Required: 1. Does this situation represent a contingent liability? Yes or No Yes No Exercise 8-14B Record warranties (LO8-5) [The following information applies to the questions displayed below.) A company restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, the company expects warranty costs to be approximately 5% of sales. Sales for the month of December are $420,000. Actual warranty expenditures in January of the following year were $14,000. Exercise 8-14B Part 1 Required: 1. Does this situation represent a contingent liability? Yes or No Yes No
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