Unearned revenue from warranty contracts presented

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Anneliese Company sells televisions at an average price of P0000 and also o?ers a separate three-year warranty contract for P000 that requires the entity to pen'orm periodic services and replace defective parts. During 2020. the entity sold 300 television sets and 220 extended warranty contracts for cash. The entity estimated the three-year warranty cost as P200 for parts and P400 tor labor and accounts for the sale of warranty separately. The sale occurred on December 31. 2020. The entity recognized income from the sale of warranty on a straight line basis. In 2021, the entity incurred actual cost relative to the warranty of P20.000 for parts and 1340000 tor labor.

1. Prepare journal entries in 2020 and 2021.

2. How is the unearned revenue from warranty contracts presented on December 31, 2021'?

Reference no: EM133209514

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