What are the warranty expense balances for 2023 and 2024

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Reference no: EM133502625

Case: Computer Company Ltd. sells computers for $2,000 each, which includes a 3-year warranty that requires the company to perform periodic services and replace defective parts. During 2023, the 49ers sold 500 computers on account. Based on past emphatical data, the company has estimated the total 3-year warranty costs of $180 per unit sold. (Assume sales all occur on December 31, 2023.) In 2024, 49ers Computer Company incurred actual warranty costs of $22,000, relative to 2023 computer sales.

Instructions

Question 1: Using the expense warranty approach, prepare the entries to reflect the above transactions (accrual method) for 2023 and 2024.

Question 2: Using the cash basis method, what are the Warranty Expense balances for 2023 and 2024?

Question 3: With proper title and classifications, present the warranty liabilities in the 2023 statement of financial position

Reference no: EM133502625

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