An electronic goods retailer sells electronic products with a standard one-year warranty agreement. In addition, the retailer allows its customers to purchase an extended warranty for an additional 2 years for $200. The retailer sold 50,000 units of electronic products during the year ended 30 June 2020. Out of these, 1000 units of products are subject to the extended warranty.Briefly explain how the retailer should account for the extended warranty attached to the 1000 units of the electronic products. You need not show any calculation and journal entry.

Extended warranty is warranty which extend normal warranty period as offered by manufacturer.…

Answered: the retailer allows its customers to…

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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An electronic goods retailer sells electronic products with a standard one-year warranty agreement. In addition, the retailer allows its customers to purchase an extended warranty for an additional 2 years for $200. The retailer sold 50,000 units of electronic products during the year ended 30 June 2020. Out of these, 1000 units of products are subject to the extended warranty.

Briefly explain how the retailer should account for the extended warranty attached to the 1000 units of the electronic products. You need not show any calculation and journal entry.

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