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What are the warranty expense balances

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Question - Dull Computers sells 14" laptops for $1,500 each and gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2024, the company sold 900 computers. Based on experience, the company has estimated the total 2-year warranty costs as $40 for parts and $60 for labor. (Assume sales all occur on December 31, 2024.)

In 2025, Dull incurred actual warranty costs relative to 2024 computer sales of $12,000 for parts and $18,000 for labor.

Required -

(a) Under the expense warranty (accrual) approach, give the entries to reflect the above transactions - including sales for 2024 and 2025.

(b) Under the cash-basis method, what are the Warranty Expense balances for 2024 and 2025?

Reference no: EM133091497

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