Metlock Company sells televisions at an average price of $ 939 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 261 warranty contracts for cash. It estimates the 3-year warranty costs as $ 20 for parts and $ 30 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. (a) Record any necessary journal entries in 2020: (b) What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified? In 2019, incurred actual costs relative to 2020 television warranty sales of parts and labor. (c) Record any necessary journal entries in 2020 relative to 2019 television warranties. (d) What amounts relative to the 2019 television warranties would appear on the December 31, 2020, balance sheet and how would they classify?
Metlock Company sells televisions at an average price of $ 939 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 261 warranty contracts for cash. It estimates the 3-year warranty costs as $ 20 for parts and $ 30 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. (a) Record any necessary journal entries in 2020: (b) What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified? In 2019, incurred actual costs relative to 2020 television warranty sales of parts and labor. (c) Record any necessary journal entries in 2020 relative to 2019 television warranties. (d) What amounts relative to the 2019 television warranties would appear on the December 31, 2020, balance sheet and how would they classify?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Metlock Company sells televisions at an average price of $ 939 and also offers to each customer a separate 3-year warranty contract for $ 87 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 261 warranty contracts for cash. It estimates the 3-year warranty costs as $ 20 for parts and $ 30 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs.
(a) Record any necessary
(b) What liability relative to these transactions would appear on the December 31, 2020,
In 2019, incurred actual costs relative to 2020 television warranty sales of parts and labor.
(c) Record any necessary journal entries in 2020 relative to 2019 television warranties.
(d) What amounts relative to the 2019 television warranties would appear on the December 31, 2020, balance sheet and how would they classify?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education