Answered

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Nash Company sold 10,800 Super-Spreaders on December 31, 2020, at a total price of $1,015,200, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $561,600. The assurance warranties extend for a 2-year period and are estimated to cost $43,400. Nash also sold extended warranties (service-type warranties) related to 2,100 spreaders for 2 years beyond the 2-year period for $12,600. Given this information, determine the amounts to report for the following at December 31, 2020: sales revenue, warranty expense, unearned warranty revenue, warranty liability, and cash.

Sagot :

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Answer:

     Amount reported in Income

Particulars                           Amount

Sales revenue                   $1,015,200

Warranty expenses           $43,400

 Amount reported on balance sheet

Particulars                                 Amount

Unearned service revenue      $12,600

Cash ($1,015,200 + $12,600)   $1,016,460

Warranty liability                       $43,400

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