Splish Music Emporium is preparing its financial statements for the year ended December 31, 2020. Determine the amounts that willbe shown on the 2020 financial statements for the following.(a)(b)(c)(d)Warranty ExpenseWarranty Liability$Premium Expense $Premium Inventory $(e) Premium LiabilityBA Splish Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheetmusic. Splish uses two sales promotion techniques-warranties and premiums-to attract customers.Musical instruments and sound equipment are sold with a 1-year warranty for replacement of parts and labor. The estimated warrantycost, based on past experience, is 1% of sales.The premium is offered on the recorded and sheet music. Customers receive a coupon for each dollar spent on recorded music orsheet music. Customers may exchange 200 coupons and $30 for an MP3 player. Splish pays $42 for each player and estimatesthat 50% of the coupons given to customers will be redeemed.Splish's total sales for 2020 were $7,562,000-$5,424,000 from musical instruments and sound reproduction equipment and$2,138,000 from recorded music and sheet music. Replacement parts and labor for warranty work totaled $88,000 during 2020($43,000 of the work is related to pre-2020 sales). A total of 7,010 players used in the premium program were purchased during theyear and there were 1,138,000 coupons redeemed in 2020.The balances in the accounts related to warranties and premiums on January 1, 2020, were as shown below.Premium InventoryPremium LiabilityWarranty Liability$ 39,21041,67053,100Splish Music Emporium is preparing its financial statements for the year ended December 31, 2020. Determine the amounts that willbe shown on the 2020 financial statements for the following.

Warranty expense is treated as a contingent liability and a provision for the same is made based on…

Splish Music Emporium is preparing its financial statements for the year ended December 31, 2020. Determine the amounts that will be shown on the 2020 financial statements for the following. (a) (b) (c) (d) (e) Warranty Expense Warranty Liability Premium Expense Premium Inventory Premium Liability $ $

Splish Music Emporium is preparing its financial statements for the year ended December 31, 2020. Determine the amounts that will be shown on the 2020 financial statements for the following. (a) (b) (c) (d) (e) Warranty Expense Warranty Liability Premium Expense Premium Inventory Premium Liability $ $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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