Question
Income statement, ratios, Record warranty expense The accounting records of Jansen Inc. included the following balances before the year end adjustments: Estimated warranty liability Sales
Income statement, ratios, Record warranty expense
The accounting records of Jansen Inc. included the following balances before the year end adjustments:
Estimated warrantyliability Sales revenueWarranty expense
| 11,000|180,000|
In the past, Jansen's Inc. warranty expense has been 3% of sales. During the current period, the business paid $6,300 to satisfy the warranty claims of customers.
Required:
.a)Record Jansen's Inc. warranty expense for the period and the company?s payments to satisfy warranty claims ?
.b)Show what Jansen Inc. will report on its income statement and balance sheet for this situation (show supporting calculations) ?
.c)Which item from part (b) will affect Jansen's current ratio? Will Jansen's Inc. current ratio increase or decrease as a result of this item? ?
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