(a), assuming that in addition to the assurance warranty, Crane sold an extended warranty (service-type warranty) for an additional 2 years (2022–2023) for $800
On January 2, 2020, Crane Company sells production equipment to Fargo Inc. for $46,000. Crane includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Crane incurs costs related to warranties of $930. At December 31, 2020, Crane estimates that $620 of warranty costs will be incurred in the second year of the warranty.
Repeat the requirements for (a), assuming that in addition to the assurance warranty, Crane sold an extended warranty (service-type warranty) for an additional 2 years (2022–2023) for $800. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
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| Jan. 2, 2020During 2020Dec. 31, 2020 |
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| Jan. 2, 2020During 2020Dec. 31, 2020 |
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| Jan. 2, 2020During 2020Dec. 31, 2020 |
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