Discuss the advantages and disadvantages of accounting

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Problem - Changes in Warranty Costs - Newton Company introduced a line of laptop computers in 2019 that carry a 1 -year assurance-type warranty. Based on experience with other computers that it sells, Newton estimated warranty costs as 3% of net sales. Net sales of the laptop in 2019 were $5,000,0000, and Newton recorded warranty expense of $150,000. In 2020, based on the previous years' warranty costs, Newton revises its estimate of warranty costs to 1% of net sales. In 2020, Newton reported $8,000,000 in net sales of the laptop.

Required -

1. Prepare any entry needed in 2020 to account for this change.

2. Discuss the advantages and disadvantages of accounting for a change in this manner.

Reference no: EM132892186

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