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On August 1, 2016, Bulda Enterprises sold 1,600 sleds to Kristoff Ice Delivery Inc. for $450 cash each. (Ignore COGS here.) Kristoff also purchased a
On August 1, 2016, Bulda Enterprises sold 1,600 sleds to Kristoff Ice Delivery Inc. for $450 cash each. (Ignore COGS here.) Kristoff also purchased a 1-year warranty for $12 cash per sled. Bulda incurred $0 in repair costs for warranty claims in 2016 and $7,000 in 2017. Of the warranty costs, 40% was attributed to parts inventory. The remaining amount was wages paid to workers, which were paid for with cash.
How much revenue is recognized in 2016 for the warranties?
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