. Al Jabel Corporation sold 1,000 mixtures during the year 2020 at $8,000 each. During the year Al Jabel spent $60,000 serving the 2-year warranties. All applicable transections are on a cash basis. (a) Prepare journal entries using expenses warranty approach, assuming that Al Jabel estimates the total cost of serving the warranties will be $240,000 for 2 years. (b) Prepare the journal entries assuming that the warranties are not an integral part of sale. Assume that of the total sales, $320,000 relates to sales of warranty contract and the cost of serving the warranties will be $240,000 for 2 years. Estimate revenues earned on the basis of cost incurred and estimated cost
. Al Jabel Corporation sold 1,000 mixtures during the year 2020 at $8,000 each. During the year Al Jabel spent $60,000 serving the 2-year warranties. All applicable transections are on a cash basis. (a) Prepare journal entries using expenses warranty approach, assuming that Al Jabel estimates the total cost of serving the warranties will be $240,000 for 2 years. (b) Prepare the journal entries assuming that the warranties are not an integral part of sale. Assume that of the total sales, $320,000 relates to sales of warranty contract and the cost of serving the warranties will be $240,000 for 2 years. Estimate revenues earned on the basis of cost incurred and estimated cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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5. Al Jabel Corporation sold 1,000 mixtures during the year 2020 at $8,000 each. During the year Al Jabel spent $60,000 serving the 2-year warranties. All applicable transections are on a cash basis.
(a) Prepare journal entries using expenses warranty approach, assuming that Al Jabel estimates the total cost of serving the warranties will be $240,000 for 2 years.
(b) Prepare the journal entries assuming that the warranties are not an integral part of sale. Assume that of the total sales, $320,000 relates to sales of warranty contract and the cost of serving the warranties will be $240,000 for 2 years. Estimate revenues earned on the basis of cost incurred and estimated cost.
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