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The Washing Machine Repair Company gives a warranty of no - cost rectification of unsatisfactory repairs. It has turnover from repair contracts recorded as: Based
The Washing Machine Repair Company gives a warranty of nocost rectification of
unsatisfactory repairs. It has turnover from repair contracts recorded as:
Based on previous experience the manager makes a provision of of turnover each
year for warranty costs. In respect of the work done during Years and repairs under
warranty are carried out as follows:
Required
a Show how this information would be recorded in the financial statements of the
Washing Machine Repair Company.
b Explain how the financial statements would appear if the company made no
provision for warranty costs but charged them to income statement profit and loss
account when incurred.
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