Reference no: EM13914660
Treetech Company is engaged in the retail sale of high-definition televisions (HDTVs). Each HDTV has a 24-month warranty on parts. If a repair under warranty is required, a charge for the labor is made. Management has found that 20 percent of the HDTVs sold require some work before the warranty expires. Furthermore, the aver- age cost of replacement parts has been $120 per repair. At the beginning of January, the account for the estimated liability for product warranties had a credit balance of $28,600. During January, 112 HDTVs were returned under the warranty.
The cost of the parts used in repairing the HDTVs was $17,530, and $18,884 was collected as ser- vice revenue for the labor involved. During January, the month before the Super Bowl, Treetech sold 450 new HDTVs.
Required:
1. Prepare journal entries to record each of the following: (a) the warranty work completed during the month, including related revenue; (b) the estimated liability for product warranties for HDTVs sold during the month.
2. Compute the balance of the Estimated Product Warranty Liability account at the end of the month.
3. If the company's product warranty liability is overestimated, what are the effects on current and future years' income?
|
Dividend is expected to grow forever at a constant rate
: Woidtke Manufacturing's stock currently sells for $30.00 a share. The stock just paid a dividend of $1.44 a share (i.e., D0 = $1.44), and the dividend is expected to grow forever at a constant rate of 5.25% a year. What stock price is expected 1 year..
|
|
Record the beginning balances and the events
: Record these events in a general journal. Open T-accounts and post the beginning balances and the preceding transactions to the appropriate accounts. Determine the balance of each account. Record the beginning balances and the events in a horizontal ..
|
|
Loan must be repaid in equal monthly payments
: A commercial bank will loan you $43,487 for 4 years to buy a car. The loan must be repaid in equal monthly payments at the end of the month. The annual interest rate on the loan is 12.05 percent of the unpaid balance. What is the amount of the monthl..
|
|
Determine the magnitudes of the effective vertical
: Structure 1 (5 m x 5 m) has a bearing pressure of 36.5 kN/m2, and structure 2 (10 m x 10 m) has a bearing pressure of 80 kN/m2. Determine the MAGNITUDES of the effective vertical (z) and the shear stress in the x-z plane at point A
|
|
Compute balance of the estimated product warranty liability
: Compute the balance of the Estimated Product Warranty Liability account at the end of the month. If the company's product warranty liability is overestimated, what are the effects on current and future years' income?
|
|
Identify each event as asset source
: Identify each event as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also identify the account that is to be debited and the account that is to be credited when the transaction is recorded.
|
|
How joint application design is a better technique
: Describe how joint application design (JAD) might be considered a better information-gathering technique than the traditional method of requirements gathering? What are its shortcomings?
|
|
Unique network address and number of subnet
: Pick a network address from the list below. Everybody must pick a unique network address and number of subnet. Please reply to the Subnetting Discussion Topic under Week 3 Discussions with your selection. Don't select a network address that som..
|
|
Manufacturing overhead is fixed and unaffected
: Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $13 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in..
|