Catskills guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 7% of sales. Assume that the Catskills dealer in Colorado Springs made sales totaling $450,000 during 2018. The company received cash for 10% of the sales and notes receivable for the remainder. Warranty payments totaled$12,000 during 2018. Requirements: 1. Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold. 2. Assume the Estimated Warranty Payable is $0 on January 1, 20182018. Post the 2018 transactions to the Estimated Warranty Payable T-account. At the end of 2018, how much in Estimated Warranty Payable does the company owe?
Catskills guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 7% of sales. Assume that the Catskills dealer in Colorado Springs made sales totaling $450,000 during 2018. The company received cash for 10% of the sales and notes receivable for the remainder. Warranty payments totaled$12,000 during 2018. Requirements: 1. Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold. 2. Assume the Estimated Warranty Payable is $0 on January 1, 20182018. Post the 2018 transactions to the Estimated Warranty Payable T-account. At the end of 2018, how much in Estimated Warranty Payable does the company owe?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Catskills guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 7%
of sales. Assume that the
Catskills dealer in Colorado Springs made sales totaling $450,000
during 2018.
The company received cash for 10% of the sales and notes receivable for the remainder. Warranty payments totaled$12,000 during 2018.
Requirements:
1.
Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold.
2.
Assume the Estimated Warranty Payable is $0 on January 1,
transactions to the Estimated Warranty Payable T-account. At the end of 2018,
how much in Estimated Warranty Payable does the company owe?
20182018.
Post the 2018transactions to the Estimated Warranty Payable T-account. At the end of 2018,
how much in Estimated Warranty Payable does the company owe?
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