Bob starts selling extended warranty for “type S” on July 1, Year 8 for the lawn mower whose original warranty expired. The company charges $500 for additional two years of warranty service and it expects to incur $400 over the two-year period. From July 1 to December 31, Year 8, the company sells 100 extended warranties and it incurs a total of $12,000 for repairs specifically related to extended warranty. Bob follows revenue approach for the extended warranty. (2) Determine the balance of unearned warranty revenue at December 31, Year 8.
Bob starts selling extended warranty for “type S” on July 1, Year 8 for the lawn mower whose original warranty expired. The company charges $500 for additional two years of warranty service and it expects to incur $400 over the two-year period. From July 1 to December 31, Year 8, the company sells 100 extended warranties and it incurs a total of $12,000 for repairs specifically related to extended warranty. Bob follows revenue approach for the extended warranty. (2) Determine the balance of unearned warranty revenue at December 31, Year 8.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 10RE
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Bob starts selling extended warranty for “type S” on July 1, Year 8 for the lawn mower whose original warranty expired. The company charges $500 for additional two years of warranty service and it expects to incur $400 over the two-year period. From July 1 to December 31, Year 8, the company sells 100 extended warranties and it incurs a total
of $12,000 for repairs specifically related to extended warranty. Bob follows revenue approach for the extended warranty.
(2) Determine the balance of unearned warranty revenue at December 31, Year 8.
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