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Sales price and an optional additional two-year

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Rich Company sells yachts. The yachts have a standard two year warranty included in the sales price and an optional additional two-year extended warranty available for purchase. Tiger Woods bought 1 yacht on January 1, 20X1, information on the sale is below. He bought the extended warranty.

Sales price10,000,000Cost of goods sold8,510,000 Extended warranty sales price680,000

Estimated costs for warranty  

Standard warranty280,000Extended warranty442,000

Actual cost of warranty work performed  

Warranty cost in 20X1115,000Warranty cost in 20X2129,000Warranty cost in 20X3258,000Warranty cost in 20X4313,000

Assuming no taxes, what is the net income (revenues less expenses) recognized in 20X3 from this sale?

Reference no: EM132420401

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