q1

A car dealer acquires a used car for $14,000, with terms FOB shipping point. compute total inventory costs assigned to the used car if additional costs include $100 for transportation-in, $120 for shipping insurance, $970 for car import duties, $180 for advertising, $1,800 for sales staff salaries and $190.00 for Trimming shrubs.

q2

Brooks Ltd. is a trading company that sells computers and home appliances. Generally, the

company sells computers under a 2-year warranty contract that requires the company to replace

defective parts and to provide the necessary repair labor. During 2022, Brooks sells for cash 400

computers at a unit price of $2,500. On the basis of past experience, the 2-year warranty costs are

estimated to be $155 for parts and $185 for labor per unit. Assume that all sales occur on December

31, 2022. The company warranty is not sold separately from the computer.

During 2022, Brooks also sells televisions at an average price of $900 and also offers to each

customer a separate 3-year warranty contract for $90 that requires the company to perform periodic

services and to replace defective parts. During 2022, the company sold 300 televisions and 270

warranty contracts for cash. It estimates the 3-year warranty costs as $20 for parts and $40 for

labor, and accounts for warranty separately. Assume that sales occurred on December 31, 2022,

and straight-line recognition of warranty revenue occurs.

In 2023, Brooks incurred actual costs as follows:

Actual cost relative to 2022 television warranty sales - $2,000 for parts and $4,000 for

labor (assume that the labor costs are not yet paid).

Actual cost relative to 2022 computer warrant - $21,400 for parts and $39,900 for labor

(assume that the labor costs are not yet paid).

Instructions

a. Record any necessary journal entries in 2022 and 2023.

b. What liability relative to these transactions would appear on the December 31, 2022

statement of financial position (balance sheet) and how would it be classified?