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kotykmax [81]
3 years ago
8

Carnes Electronics sells consumer electronics that carry a 90-day manufacturer’s warranty. At the time of purchase, customers ar

e offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes received $412,000 for these extended warranties (approximately evenly throughout the year). Required: 1-a. Does this situation represent a loss contingency? 1-b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that should be recorded during the year.
Business
1 answer:
saw5 [17]3 years ago
3 0

Answer: See explanation

Explanation:

a. This is not a loss contingency. A loss contingency occurs when the value of an asset is reduced because of an occurence on the future. This isn't the case here as a separate sales transaction occured.

b. To account for it, we have to defer the revenue as a liability and then we will use the straight line basis to calculate the warranty expense.

2. Dr Cash $412,000

Cr Unearned revenue - extended warranties $ 412,000

(To record the sale of extended warranty)

Dr Unearned revenue - extended warranties. $57937.50

Cr. Revenue - Extended Warranties $57937.50

(To record revenue earned on extended warranty)

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Answer: 500kg

Explanation:

Economic Order Quantity (EOQ) is the amount of units that should be added by a company to its inventory so.as to reduce total inventory cost.

From the question, the economic order quantity will be calculated as:

Drmqnd per year will be:

= 250 days/$0.04

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The annual carrying cost per unit will be:

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EOQ =[√(2×12500×100)/10]

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4 years ago
Suppose you have the following information on Sam's budget. Sam has a yearly budget of $2000 to spend on consuming concert ticke
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Answer:

Bundles                           A           B           C           D

Concert Tickets              80         60         20          0

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Explanation:

Since each concert ticket costs $25,

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Since each concert ticket costs $10,

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