On September 1, 2019, Carolina Electronics Company has 1,160 Blu-ray players ready for sale. On October 1, 2019, 810 are sold, on account, at $135 each with a 1-year assurance-type warranty. Carolina estimates that the warranty cost on each Blu-ray player sold will probably average $8 per unit. During the final 3 months of 2019, Carolina incurred warranty costs of $3,300, and in 2020 warranty costs were $3,180. Required: 1. Prepare the journal entries for the preceding transactions. 2. Show how the preceding items would be reported on the December 31, 2019, balance sheet. 3. Prepare the journal entries for the preceding transactions using the modified cash basis method
On September 1, 2019, Carolina Electronics Company has 1,160 Blu-ray players ready for sale. On October 1, 2019, 810 are sold, on account, at $135 each with a 1-year assurance-type warranty. Carolina estimates that the warranty cost on each Blu-ray player sold will probably average $8 per unit. During the final 3 months of 2019, Carolina incurred warranty costs of $3,300, and in 2020 warranty costs were $3,180. Required: 1. Prepare the journal entries for the preceding transactions. 2. Show how the preceding items would be reported on the December 31, 2019, balance sheet. 3. Prepare the journal entries for the preceding transactions using the modified cash basis method
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On September 1, 2019, Carolina Electronics Company has 1,160 Blu-ray players ready for sale. On October 1, 2019, 810 are sold, on account, at $135 each with a 1-year assurance-type warranty. Carolina estimates that the warranty cost on each Blu-ray player sold will probably average $8 per unit. During the final 3 months of 2019, Carolina incurred warranty costs of $3,300, and in 2020 warranty costs were $3,180.
Required:
| 1. | Prepare the |
| 2. | Show how the preceding items would be reported on the December 31, 2019, |
| 3. | Prepare the journal entries for the preceding transactions using the modified cash basis method. |
| 4. | Next Level Which method produces the better measure of income? Why? |
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