University Computers Unlimited (UCU) sells computers for $2,000 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and replace defective parts. During 2004, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs per computer as $40 for parts and $80 for labor. (Assume sales all occur at December 31, 2004.) In 2005, UCU incurred actual warranty costs relative to 2004 computer sales of $10,000 for parts and $24,000 for labor. Under the expense warranty treatment, (accrual method) what is the balance under current liabilities in the 2004 balance sheet? a. $84,000. b. $24,000. c. $34,000. d. none of the above.

University Computers Unlimited (UCU) sells computers for $2,000 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and replace defective parts. During 2004, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs per computer as $40 for parts and $80 for labor. (Assume sales all occur at December 31, 2004.) In 2005, UCU incurred actual warranty costs relative to 2004 computer sales of $10,000 for parts and $24,000 for labor. Under the expense warranty treatment, (accrual method) what is the balance under current liabilities in the 2004 balance sheet? a. $84,000. b. $24,000. c. $34,000. d. none of the above.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6MC

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