(a) Record the above transactions by using the expense warranty treatment for the years 2019 and 2020. (b) If the company sold printers in cash, what are the amounts of warranty expense for 2019 and 2020? (c) Determine amounts of warranty liability that should be recorded under current liabilities and long-term liabilities for the year 2019?
Milima Electronic Company sells on account printers for RM1,500 each with a 2-year warranty
for performing periodic services and replacing defective parts. Because of COVID 19
pandemic, the company sold only 700 printers on December 2019, however, based on past
experience, the company has estimated the total 2-year warranty costs as RM30 for parts and
RM60 for labor. On 2020, Miley incurred actual warranty costs relative to 2019 printer sales
of RM10,000 for parts and RM18,000 for labor.
REQUIRED:
(a) Record the above transactions by using the expense warranty treatment for the years
2019 and 2020.
(b) If the company sold printers in cash, what are the amounts of warranty expense for 2019
and 2020?
(c) Determine amounts of warranty liability that should be recorded under current liabilities
and long-term liabilities for the year 2019?
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