On September 1, Year 1, Carolina Electronics Company has 1,150 streaming devices ready for sale. On October 1, 820 are sold at $120 each with a 1-year assurance-type warranty. Carolina estimates that the warranty cost on each streaming device sold will probably average $7 per unit. During the final 3 months of Year 1, Carolina incurred warranty costs of $3,450. Warranty costs in Year 2 were $2,290. Required: 1. Prepare the journal entries for the preceding transactions. 2. Show how the preceding items would be reported on the December 31, Year 1, balance sheet. 3. Prepare the journal entries for the preceding transactions using the modified cash basis method.
On September 1, Year 1, Carolina Electronics Company has 1,150 streaming devices ready for sale. On October 1, 820 are sold at $120 each with a 1-year assurance-type warranty. Carolina estimates that the warranty cost on each streaming device sold will probably average $7 per unit. During the final 3 months of Year 1, Carolina incurred warranty costs of $3,450. Warranty costs in Year 2 were $2,290. Required: 1. Prepare the journal entries for the preceding transactions. 2. Show how the preceding items would be reported on the December 31, Year 1, 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
Related questions
Question
On September 1, Year 1, Carolina Electronics Company has 1,150 streaming devices ready for sale. On October 1, 820 are sold at $120 each with a 1-year assurance-type warranty. Carolina estimates that the warranty cost on each streaming device sold will probably average $7 per unit. During the final 3 months of Year 1, Carolina incurred warranty costs of $3,450. Warranty costs in Year 2 were $2,290.
Required:
| 1. | Prepare the |
| 2. | Show how the preceding items would be reported on the December 31, Year 1, |
| 3. | Prepare the journal entries for the preceding transactions using the modified cash basis method. |
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