Exercise 9-6A (Algo) Effect of warranties on income and cash flow LO 9-4 To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for $200,000 and sold them for $310,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3 percent of sales. During the year, she paid $3,420 cash to replace a defective tuner. Required a. Prepare an income statement and statement of cash flows for Daun's first year of operation. b. Based on the information given, what is Daun's total warranties liability at the end of the accounting period? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Prepare an income statement for Daun's first year of operation. DAUN'S STEREOS Income Statement
Exercise 9-6A (Algo) Effect of warranties on income and cash flow LO 9-4 To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for $200,000 and sold them for $310,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3 percent of sales. During the year, she paid $3,420 cash to replace a defective tuner. Required a. Prepare an income statement and statement of cash flows for Daun's first year of operation. b. Based on the information given, what is Daun's total warranties liability at the end of the accounting period? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Prepare an income statement for Daun's first year of operation. DAUN'S STEREOS Income Statement
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 9-6A (Algo) Effect of warranties on income and cash flow LO 9-4
To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations,
Daun purchased the stereo systems for $200,000 and sold them for $310,000 cash. She provided her customers with a one-year
warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3
percent of sales. During the year, she paid $3,420 cash to replace a defective tuner.
Required
a. Prepare an income statement and statement of cash flows for Daun's first year of operation.
b. Based on the information given, what is Daun's total warranties liability at the end of the accounting period?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Req B
Prepare an income statement for Daun's first year of operation.
DAUN'S STEREOS
Income Statement
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