What balance of liability could you show

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Question - Burak Zone is a known seller of televisions for $ 2,000 each, which incorporates a 3-year warranty that obligates the company to perform maintenance services and to replace defective parts. In the year of 2020, Burak was able to sell 500 computers on creedit. Citing historical numbers, the company estimate the total 3-year warranty costs at $ 80 for parts and $ 100 for labour.

During 2021, Burak actually incurred actual warranty costs relative to 2020 television sales of $ 10,000 for parts and $ 12,000 for labour.

1) If you were to apply warranty expense approach, how would you prepare the entries of the situation above in 2020 2021?

2) What balance of liability could you show in the year 2020 in the statement of financial position?

Reference no: EM133168102

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