Wilder Watersports Inc. sells luxury yachts and related equipment. The sale price of each yacht includes a three-year comprehensive warranty that covers all repairs and maintenance for the period. Each yacht sells for $3,000,000. A review of competitor pricing indicates that a similar warranty, if sold separately, would be valued at $10,000. On January 1, 2021, Wilder Watersports Inc. sold seven yachts. Repair costs actually incurred for these yachts were as follows: Year ended December 31, 2021 $12,000 Year ended December 31, 2022 $30,000 Year ended December 31, 2023 $35,000 Required: a. Prepare all the necessary journal entries for 2021, 2022, and 2023 to reflect the above transactions. b. Calculate the amount of unearned revenue to be reported at December 31, 2022
Wilder Watersports Inc. sells luxury yachts and related equipment. The sale price of each yacht includes a three-year comprehensive warranty that covers all repairs and maintenance for the period. Each yacht sells for $3,000,000. A review of competitor pricing indicates that a similar warranty, if sold separately, would be valued at $10,000. On January 1, 2021, Wilder Watersports Inc. sold seven yachts. Repair costs actually incurred for these yachts were as follows: Year ended December 31, 2021 $12,000 Year ended December 31, 2022 $30,000 Year ended December 31, 2023 $35,000 Required: a. Prepare all the necessary journal entries for 2021, 2022, and 2023 to reflect the above transactions. b. Calculate the amount of unearned revenue to be reported at December 31, 2022
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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Wilder Watersports Inc. sells luxury yachts and related equipment. The sale price of each yacht
includes a three-year comprehensive warranty that covers all repairs and maintenance for the period.
Each yacht sells for $3,000,000. A review of competitor pricing indicates that a similar warranty, if
sold separately, would be valued at $10,000. On January 1, 2021, Wilder Watersports Inc. sold seven
yachts. Repair costs actually incurred for these yachts were as follows:
Year ended December 31, 2021
$12,000
Year ended December 31, 2022
$30,000
Year ended December 31, 2023
$35,000
Required:
a. Prepare all the necessary journal entries for 2021, 2022, and 2023 to reflect the above
transactions.
b. Calculate the amount of unearned revenue to be reported at December 31, 2022
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