Braden Bonnet Technologies manufactures sewing and pressing machines that are used in the manufacture of felt hats. Each machine sold includes a three-year limited warranty that guarantees repairs if the machine should fail. The warranty is an integral part of the sale price and is not considered a separate performance obligation. In 2021, 3,000 machines were sold at a price of $11,000 each. Based on past experience, the company has estimated that the expected value of the warranty repairs will be $600 per machine. Actual repair costs on the machines sold in 2021 were incurred as follows: Year Costs Incurred 2021 $970,000 2022 $340,000 2023 $420,000 Required: a. Prepare all the journal entries to record the sale and warranty transactions for 2021 to 2023. b. Determine the warranty liability balance that will be reported at each year-end from 2021 to 2023. G (Ctrl) ►
Braden Bonnet Technologies manufactures sewing and pressing machines that are used in the manufacture of felt hats. Each machine sold includes a three-year limited warranty that guarantees repairs if the machine should fail. The warranty is an integral part of the sale price and is not considered a separate performance obligation. In 2021, 3,000 machines were sold at a price of $11,000 each. Based on past experience, the company has estimated that the expected value of the warranty repairs will be $600 per machine. Actual repair costs on the machines sold in 2021 were incurred as follows: Year Costs Incurred 2021 $970,000 2022 $340,000 2023 $420,000 Required: a. Prepare all the journal entries to record the sale and warranty transactions for 2021 to 2023. b. Determine the warranty liability balance that will be reported at each year-end from 2021 to 2023. G (Ctrl) ►
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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