Question
I need help find Sale of machinery and warranty expense incurred in 2020, Warranty accrual on December 31 2020, Warranty accrual on December 31 2021,
I need help find Sale of machinery and warranty expense incurred in 2020, Warranty accrual on December 31 2020, Warranty accrual on December 31 2021, and warranty liability. Thanks
Larkspur Company sells a machine for $7140 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sell 440 machines in 2020 warranty expense is incurred half in 2020 and half in 2021. As a result of product testing the company estimates that the warranty cost is $310 per machine $132 parts and $178 labor. Use inventory account to record the warranty expense. Assuming that actual warranty costs are incurred exactly as estimated.
- a/ Sale of machinery and warranty expense incurred in 2020
- b/ Warranty accrual on December 31 2020
- c/ Warranty accrual on December 31 2021
- d/ what amount if any is disclosed in balance sheet as liability for future warranty costs as December 31 2020
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