Use the information given below to answer Questions 10 - 15.

Robin Industries, Inc., [RI] manufactures and sells electronic solid fuel powered vehicles popularly known asBatKars[BK].All units are sold with under a two-year warranty contract with a commitment to replace defective parts and provide the necessary labor services for such repair .During 2018 the corporation sold 6,000BKs for cash at a unit price of $4,000. Based on past experience, the two-year warranty contracts are estimated to cost the company $380 per unit which included $80 per unit on parts and the balance for labor.These are recorded at the time when the sales are recorded.During 2018,RIincurred actual costs of $990,000 (which consisted of $444,000 for parts and the rest for labor) on repair work called for by customers on the sold units.

Apply the expense-based (assurance-type) approach for answering Questions 10 - 12 stated below.

10]The entry to record the warranty contracts issued in 2018 would be

a.

Warranty Expenses......DR$1,080,000;Warranty Expenses Payable......CR$1,080,000.

b.

Warranty expenses......DR$2,280,000;Cash......CR$2,280,000.

c.

Warranty Expenses......DR$2,280,000;Estimated Warranty Liabilities......CR$2,280,000.

d.

Warranty expenses......DR$2,280,000;Parts Inventory......CR$480,000;Direct Labor......CR$1,800,000

e.

Warranty expenses......DR$24,000,000;Cash......CR$24,000,000.

11]Prepare the journal entry to record the actual warranty costs incurred byRIduring 2018.

a.

Warranty expenses......DR$1,080,000;Parts Inventory......CR$1,080,000.

b.

Estimated Warranty Liabilities......DR$1,080,000;Parts Inventory......CR$1,080,000.

c.

Estimated Warranty Liabilities......DR$990,000;Parts Inventory......CR$444,000;Direct Labor......CR$546,000;..

d.

Warranty expenses......DR$1,290,000;Estimated Warranty Liabilities......CR$1,290,000.

e.

Warranty expenses......DR$1,080,000;CRCash......$1,080,000.

12.How would the warranty transactions be reported on the financial statements for December 31, 2018 stating the appropriate classifications and amounts?

a.

Income Statement:Sales Revenues ... $24,000,000; Warranty Expenses ... $2,280,000; and

Balance Sheet: Non-Current Liability - Estimated Liability for Warranties ... $1,290,000.

b.

Income Statement: Warranty Revenues ... $24,000,000; Warranty Expenses ... $2,280,000; and

Balance Sheet: Current Liability - Estimated Liability for Warranties ... $1,290,000.

c.

Income Statement:Sales Revenues ... $24,000,000; Warranty Expenses ... $990,000; and

Balance Sheet: Current Liability - Warranties Payable ... $990,000.

d.

Income Statement:Sales Revenues ... $24,000,000; Warranty Expenses ... $990,000; and

Balance Sheet: Non-Current Liability - Estimated Liability for Warranties ... $1,290,000.

e.

None of the above.

You are then further informed that RI estimates $500 per unit of the product revenues from the above mentioned sales would would be considered as warranty revenues.40% of these warranty revenues relate to year 2018 and the balance to year 2019.

Now applythe revenue-based (service-type) approachfor answering Questions 13 - 15.

13]What would be the journal entry to record the sales of the BatKars and the warranty in 2018?

a.

Cash......DR$24,000,000;Sales Revenue......CR$21,000,000; Warranty Payable......CR$3,000,000.

b.

Cash......DR$24,000,000;Sales Revenue......CR$21,000,000; Unearned Warranty Revenue......CR$3,000,000.

c.

Cash......DR$24,000,000;Sales Revenue......CR$21,000,000; Gain On Warranty......CR$3,000,000.

d.

Cash......DR$24,000,000;Sales Revenue......CR$23,010,000; Warranty Payable......CR$990,000.

e.

None of the above.

The journal entry to record the actual warranty costs incurred in 2018 would be

a.

Warranty Expense......DR$990,000;Cash......CR$546,000;Parts Inventory......CR$444,000.

b.

Warranty Expense......DR$990,000;Warranty Payable......CR$990,000.

c.

Warranty Expense......DR$990,000;Estimated Liability for Warranties......CR$990,000.

d.

Warranty Revenues......DR$990,000;Cash......CR$546,000;Parts Inventory......CR$444,000.

e.

Warranty Expense......DR$990,000;Direct Labor......CR$546,000;Parts Inventory......CR$444,000.

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15]How would the warranty transactions be reported on the financial statements for December 31, 2018 stating the appropriate classifications and amounts?

a.

Income Statement:Sales Revenue......$21,000,000; Warranty Revenue......$1,200,000; and Warranty Expenses......$990,000; and

Balance Sheet: Current Liability - Estimated Liability for Warranties......$1,800,000.

b.

Income Statement: Warranty Revenue......$21,000,000;Warranty Revenue......$1,200,000; Warranty Expenses......$990,000; and

Balance Sheet: Current Liability - Unearned warranty revenue......$1,800,000.

c.

Income Statement: Warranty Revenue......$21,000,000;Warranty Revenue......$1,200,000; Warranty Expenses......$990,000; and

Balance Sheet: Non-Current Liability - Unearned warranty revenue......$1,800,000.

d.

Income Statement: Sales Revenues......$24,000,000; Warranty Expenses......$1,200,000; and

Balance Sheet: Current Liability - Unearned warranty revenue......$1,800,000.

e.

None of the above.

How would the warranty transactions be reported on the financial statements for December 31, 2018 stating the appropriate classifications and amounts?

a.

Income Statement:Sales Revenue......$21,000,000; Warranty Revenue......$1,200,000; and Warranty Expenses......$990,000; and

Balance Sheet: Current Liability - Estimated Liability for Warranties......$1,800,000.

b.

Income Statement: Warranty Revenue......$21,000,000;Warranty Revenue......$1,200,000; Warranty Expenses......$990,000; and

Balance Sheet: Current Liability - Unearned warranty revenue......$1,800,000.

c.

Income Statement: Warranty Revenue......$21,000,000;Warranty Revenue......$1,200,000; Warranty Expenses......$990,000; and

Balance Sheet: Non-Current Liability - Unearned warranty revenue......$1,800,000.

d.

Income Statement: Sales Revenues......$24,000,000; Warranty Expenses......$1,200,000; and

Balance Sheet: Current Liability - Unearned warranty revenue......$1,800,000.

e.

None of the above.

This would be such a big help, thank youu!!!