Classified if expense warranty accrual method is applied

Assignment Help Financial Accounting

Reference no: EM13864857

Brooks Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2014, the corporation sells for cash 471 computers at a unit price of $3,010. On the basis of past experience, the 2-year warranty costs are estimated to be $168 for parts and $218 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2014.) The warranty is not sold separately from the computer.

What liability relative to these transactions would appear on the December 31, 2014, balance sheet and how would it be classified if the expense warranty accrual method is applied??

Reference no: EM13864857

Questions Cloud

Fixed manufacturing costs : A company has fixed manufacturing costs of $400,000 and produces 100,000 units and sells 85,000 units. There is no beginning inventory. Which of the following conclusions can be drawn?

Contribution margin ratio : Barking Dog Company has a contribution margin ratio of 21%. Barking Dog desires a profit of $315,000 and must cover fixed costs of $945,945. What level of sales must Barking Dog reach in order to achieve its goal?

How many elites will be sold at the break-even point : Richter Company sells two models of its product. The Premium sells for $100 and has variable cost of $60. The Elite sells for $70 and has variable cost of $50. Richter typically sells 3 Elites for every Premium sold. Fixed costs are $250,000. How man..

Major investment outlay for machinery and equipment : Stellar Packaging Products is considering diversifying its product line offerings into candy and other food bag packaging. This would require a major investment outlay for machinery and equipment. Give one example of different costs that would be con..

Classified if expense warranty accrual method is applied : Brooks Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2014, the corporation sells for cash 471 computers at a unit price of $3,01..

How to install single-phase electrical wiring : How to install Single-Phase Electrical Wiring in a Multi-Story Building ? (Requirements,General Precaution and step by step explanation) .

Insurance expense on the annual income statement : On July 1, a company paid the $3,480 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the current year ended December 31?

Prepaid insurance account : On January 1 a company purchased a five-year insurance policy for $2,300 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at t..

What is the amount of insurance expense : On May 1, a two-year insurance policy was purchased for $50,400 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

User Account

All Pages