Flounder Company sells televisions at an average price of $976 and also offers to each customer a separate 3-year warranty contract for $96 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 279 televisions and 189 warranty contracts for cash. It estimates the 3-year warranty costs as $18 for parts and $28 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs.

Part 1

Correct answer icon

Your answer is correct.

Record any necessary journal entries in 2020. (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 amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

eTextbook and Media

List of Accounts

Attempts: 1 of 15 used

Part 2

What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified?

Flounder Company Balance Sheet (Partial) For the Year Ended December 31, 2020December 31, 2020For the Month Ended December 31, 2020
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term LiabilitiesLong-term DebtProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term LiabilitiesTotal Long-term DebtTotal Property, Plant and EquipmentTotal Stockholders' Equity:
			$
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term LiabilitiesLong-term DebtProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term LiabilitiesTotal Long-term DebtTotal Property, Plant and EquipmentTotal Stockholders' Equity:
			$

eTextbook and Media

List of Accounts

Save for Later

Attempts: 0 of 15 used

Submit Answer

Part 3

In 2021, Flounder Company incurred actual costs relative to 2020 television warranty sales of $2,040 for parts and $3,930 for labor. Record any necessary journal entries in 2021 relative to 2020 television warranties. Use "Inventory" account to record the warranty expense. (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 amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
(To record the warranty revenue earned.)
(To record the warranty expense.)

eTextbook and Media

List of Accounts

Save for Later

Attempts: 0 of 15 used

Submit Answer

Part 4

What amounts relative to the 2020 television warranties would appear on the December 31, 2021, balance sheet and how would they be classified?

Flounder Company Balance Sheet (Partial) December 31, 2021For the Year Ended December 31, 2021For the Month Ended December 31, 2021
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term LiabilitiesLong-term DebtProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term LiabilitiesTotal Long-term DebtTotal Property, Plant and EquipmentTotal Stockholders' Equity:
			$
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term LiabilitiesLong-term DebtProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term LiabilitiesTotal Long-term DebtTotal Property, Plant and EquipmentTotal Stockholders' Equity:
			$

eTextbook and Media

List of Accounts

Save for Later

Attempts: 0 of 15 used

Submit Answer