Gonzalez Equipment Company sold 600 Rollomatics during 2014 at $4,000 each. During 2014, Gonzalez spent $30,000 servicing
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(a) Prepare 2014 entries for Gonzalez using the expense warranty approach. Assume that Gonzalez estimates the total cost of servicing the warranties will be $150,000 for 2 years.
(b) Prepare 2014 entries for Gonzalez assuming that the warranties are not an integral part of the sale. Assume that of the sales total, $200,000 relates to sales of warranty contracts. Gonzalez estimates the total cost of servicing the warranties will be $150,000 for 2 years. Estimate revenues earned on the basis of costs incurred and estimated costs.
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Related Book For
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
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