•4 E13-12 (Warranties) Selzer Equipment Company sold 500 Rollomatics during 2010 at $6,000 each. During 2010, Selzer spent $30,000 servicing the 2-year warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. Instructions (a) Prepare 2010 entries for Selzer using the expense warranty approach. Assume that Selzer estimates the total cost of servicing the warranties will be $120,000 for 2 years. (b) Prepare 2010 entries for Selzer assuming that the warranties are not an integral part of the sale. Assume that of the sales total, $160,000 relates to sales of warranty contracts. Selzer estimates the total cost of servicing the warranties will be $120,000 for 2 years. Estimate revenues earned on the basis of costs incurred and estimated costs.

•4 E13-12 (Warranties) Selzer Equipment Company sold 500 Rollomatics during 2010 at $6,000 each. During 2010, Selzer spent $30,000 servicing the 2-year warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. Instructions (a) Prepare 2010 entries for Selzer using the expense warranty approach. Assume that Selzer estimates the total cost of servicing the warranties will be $120,000 for 2 years. (b) Prepare 2010 entries for Selzer assuming that the warranties are not an integral part of the sale. Assume that of the sales total, $160,000 relates to sales of warranty contracts. Selzer estimates the total cost of servicing the warranties will be $120,000 for 2 years. Estimate revenues earned on the basis of costs incurred and estimated costs.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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