.Show all entries are required concerning warranties for 2020 and the computations that justify the amounts. b.What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it beclassified? c.In 2021, KleinCompany incurred actual costs relative to 2020tub warranty sales of $4,100 for parts and $6,800for labor.Record any necessary journal entries for these items.
Klein Company sells step-in bathtubs at an average price of $4,100. Customers are allowed to purchase a separate, five-year warranty contract for $215 that requires the company to perform periodic services and to replaceany defective parts.
During 2020, the company sold 625 step-in tubs and 460 warranty contracts for cash. It estimates the 5-year warrantywill cost the company $45 for parts and $90 for laborfor each tub sold. Assume all tub sales occurred on December 31, 2020, andthat the company recognizes warranty revenue over the life of the warranty.
a.Show all entries are required concerning warranties for 2020 and the computations that justify the amounts.
b.What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it beclassified?
c.In 2021, KleinCompany incurred actual costs relative to 2020tub warranty sales of $4,100 for parts and $6,800for labor.Record any necessary
d.What amounts relative tothe 2020 step-intub warranties would appear on the December 31, 2021, balance sheet and howwould they be classified?
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