The Washing Machine Repair Company gives a warranty of no$-$cost rectification of

unsatisfactory repairs. It has turnover from repair contracts recorded as:

Based on previous experience the manager makes a provision of $10\%$ of turnover each

year for warranty costs. In respect of the work done during Years $1$ and $2,$ 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.