ScreenShine $[SS]$ sells several high quality electronic products. One $of$ these $isan$ electronic screen

which $it$ sells $at$ $$3,400$ each with a standard one$-$year warranty. $It$ also sells $to$ its customers a separate

three$-$year extended warranty, commencing after the end $of$ the standard warranty. $SS$ offers its

customers who have purchased such extended warranties a service, when necessary, $to$ perform either

appropriate repairs $orto$ replace the defective unit.

The company estimates, based upon its experience from prior years, the total warranty costs for the

standard warranty $to$ average $$100$ per screen, being $$60$ for parts and $$40$ for labor. $It$ also expects the

average three$-$year extended warranty costs $tobe$ different. Costs for the three$-$year extended warranties

were expected $tobe$ $$80$ for parts and $$160$ for labor for each warranty contract. $It$ further assumes that

the warranty costs for the extended warranty contracts will $be$ incurred $as$ follows: $20\%in2022,50\%in$

$2023$ and the balance $in2024.$ And finally, $SS$ expects $to$ recognize warranty revenues based $on$ the

proportion $of$ warranty costs incurred out $of$ the total estimated costs.

During $2021,$ the company sold $1,200$ screens and $1,080$ extended warranty contracts for cash. During

the year, $it$ incurred some actual costs associated with the standard warranties related $to$ the $2021$ sales

$of$ screens. The cost for parts were $150\%of$ the labor costs. $On$ December $31,2021,SS$ reported the

following:

Current Liabilities:

Estimated Liability Under Warranty $ $61,200$

Unearned Warranty Revenue $$302,400$

$SS$ incurred actual costs, associated with the standard warranties related $to$ the $2021$ sales $of$ screens, $in$

$2022.$ These amounted $to$ $$70,800$ out $of$ which, overhead costs amounted $to$ $$23,600.It$ further incurred

actual costs associated with the extended warranty contracts which were consistent with what the

company had expected $to$ incur $as$ stated above.

Required:

$1.$ Determine the selling price for each extended warranty contract.

$2.$ Present all journal entries $tobe$ prepared, $in$ proper format, $in2021in$ order $to$ record all $of$ the

warranty related transactions and adjustments for $2021.$

$3.$ Present all journal entries $tobe$ prepared, $in$ proper format, $in2022in$ order $to$ record all $of$ the

transactions related $to$ the standard warranties $of2021.$QUESTION $I$

ScreenShine $[SS]$ sells several high quality electronic products. One $of$ these $isan$ electronic screen

which $it$ sells $at$ $$3,400$ each with a standard one$-$year warranty. $It$ also sells $to$ its customers a separate

three$-$year extended warranty, commencing after the end $of$ the standard warranty. $SS$ offers its

customers who have purchased such extended warranties a service, when necessary, $to$ perform either

appropriate repairs $orto$ replace the defective unit.

The company estimates, based upon its experience from prior years, the total warranty costs for the

standard warranty $to$ average $$100$ per screen, being $$60$ for parts and $$40$ for labor. $It$ also expects the

average three$-$year extended warranty costs $tobe$ different. Costs for the three$-$year extended warranties

were expected $tobe$ $$80$ for parts and $$160$ for labor for each warranty contract. $It$ further assumes that

the warranty costs for the extended warranty contracts will $be$ incurred $as$ follows: $20\%in2022,50\%in$

$2023$ and the balance $in2024.$ And finally, $SS$ expects $to$ recognize warranty revenues based $on$ the

proportion $of$ warranty costs incurred out $of$ the total estimated costs.

During $2021,$ the company sold $1,200$ screens and $1,080$ extended warranty contracts for cash. During

the year, $it$ incurred some actual costs associated with the standard warranties related $to$ the $2021$ sales

$of$ screens. The cost for parts were $150\%of$ the labor costs. $On$ December $31,2021,SS$ reported the

following:

Current Liabilities:

Estimated Liability Under Warranty

$$61,{200}_{{?}_{?}}$

Unearned Warranty Revenue

$$302,{400}_{{?}_{?}}$

$SS$ incurred actual costs, associated with the standard warranties related $to$ the $2021$ sales $of$ screens, $in$

These amounted $to$ $$70,800$ out $of$ which, overhead costs amounted $to$ $$23,600.It$ further incurred

actual costs associated with the extended warranty contracts which were consistent with what the

company had expected $to$ incur $as$ stated above.

Required:

Determine the selling price for each extended warranty contract.

Present all journal entries $tobe$ prepared, $in$ proper format, $in2021in$ order $to$ record all $of$ the

warranty related transactions and adjustments for $2021.$

Present all journal entries $tobe$ prepared, $in$ proper format, $in2022in$ order $to$ record all $of$ the

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