Metlock Company sells televisions at an average price of $ 939 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 261 warranty contracts for cash. It estimates the 3-year warranty costs as $ 20 for parts and $ 30 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. (a) Record any necessary journal entries in 2020: (b) What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified? In 2019, incurred actual costs relative to 2020 television warranty sales of parts and labor. (c) Record any necessary journal entries in 2020 relative to 2019 television warranties. (d) What amounts relative to the 2019 television warranties would appear on the December 31, 2020, balance sheet and how would they classify?
Metlock Company sells televisions at an average price of $ 939 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 261 warranty contracts for cash. It estimates the 3-year warranty costs as $ 20 for parts and $ 30 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. (a) Record any necessary journal entries in 2020: (b) What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified? In 2019, incurred actual costs relative to 2020 television warranty sales of parts and labor. (c) Record any necessary journal entries in 2020 relative to 2019 television warranties. (d) What amounts relative to the 2019 television warranties would appear on the December 31, 2020, balance sheet and how would they classify?
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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10E
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Metlock Company sells televisions at an average price of $ 939 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 261 warranty contracts for cash. It estimates the 3-year warranty costs as $ 20 for parts and $ 30 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs.
(a) Record any necessary
(b) What liability relative to these transactions would appear on the December 31, 2020,
In 2019, incurred actual costs relative to 2020 television warranty sales of parts and labor.
(c) Record any necessary journal entries in 2020 relative to 2019 television warranties.
(d) What amounts relative to the 2019 television warranties would appear on the December 31, 2020, balance sheet and how would they classify?
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