Borden Inc. sells televisions and other electronics. The company sells televisions that come with a 90-day warranty against defects. Borden also separately sells a 3-year extended coverage plan. During the year, customers paid $600,000 for the televisions alone and other customers paid $200,000 for televisions combined with the 3-year warranty. The stand-alone price for just the televisions that were sold with the 3-year warranty would have been $189,000 and the stand-alone price for just the 3-year warranties would have been $21,000 (or a combined $210,000). The company estimates that the costs for the 90-day warranties would be a total of $15,000. What would be the total amount of cash that would be recorded? $_ What would be the warranty expense recognized? $_ What would be the warranty liability recognized? $_ What would be the amount of sales revenue recognized? $. What would be recognized for the 3-year warranty revenue (whether it is earned or unearned)? $_ Would the 3-year warranty revenue be treated as earned or unearned?

Borden Inc. sells televisions and other electronics. The company sells televisions that come with a 90-day warranty against defects. Borden also separately sells a 3-year extended coverage plan. During the year, customers paid $600,000 for the televisions alone and other customers paid $200,000 for televisions combined with the 3-year warranty. The stand-alone price for just the televisions that were sold with the 3-year warranty would have been $189,000 and the stand-alone price for just the 3-year warranties would have been $21,000 (or a combined $210,000). The company estimates that the costs for the 90-day warranties would be a total of $15,000. What would be the total amount of cash that would be recorded? $_ What would be the warranty expense recognized? $_ What would be the warranty liability recognized? $_ What would be the amount of sales revenue recognized? $. What would be recognized for the 3-year warranty revenue (whether it is earned or unearned)? $_ Would the 3-year warranty revenue be treated as earned or unearned?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 56BE

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