On January 2, 2019, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a

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On January 2, 2019, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2019. During 2019, Grando incurs costs related to warranties of $900. At December 31, 2019, Grando estimates that $650 of warranty costs will be incurred in the second year of the warranty.
Instructions
a. Prepare the journal entry to record this transaction during 2019 (assuming financial statements are prepared on December 31, 2019).
b. Repeat the requirements for (a), assuming that in addition to the assurance warranty, Grando sold an extended warranty (service-type warranty) for an additional 2 years (2021-2022) for $800.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 978-1119372936

3rd edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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