5 5 Color the World Co., with a December 31 year end date, started to sell...

 

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5 5 Color the World Co., with a December 31 year end date, started to sell high definition televisions for $2,000 each on Jan 1, 2018. Each television includes one year warranty covering parts and labor. In addition the customers can purchase an extended warranty for additional two years for $100 to cover repairs needed after the original one year warranty expires. Warranty revenue is recognized evenly over the warranty time period. The Company follows ASPE. The company estimates that repair cost will be $70 for each television and 5% of TVS sold will need to be repaired within 1 year of sale. The company's sales, repair data and actual repair cost is provided in the table below. Please look at the requirements to answer this question below. Warranty Cost and Repair Information for three years Number of Number of Extended Year Actual Number of Actual Reapir Cost for the TV Sold Warranty TV Repaired Year ($) Sold + 2018 2019 2020 Warranty Estimate 1,500 450 200 18,500 1,250 320 250 23,500 1,800 400 300 25,200 Requirement - 1 It is estimated that 5% TVs will require warranty within 1 year of sales. Calculate Warranty Expense and Warranty Liability for the three years and fill in the yellow cells below for assurance type warranty for the company. Year Warranty Expense 2018 2019 2020 Warrnty Liability Full Mark Mark Rcvd 4 4 5 5 Color the World Co., with a December 31 year end date, started to sell high definition televisions for $2,000 each on Jan 1, 2018. Each television includes one year warranty covering parts and labor. In addition the customers can purchase an extended warranty for additional two years for $100 to cover repairs needed after the original one year warranty expires. Warranty revenue is recognized evenly over the warranty time period. The Company follows ASPE. The company estimates that repair cost will be $70 for each television and 5% of TVS sold will need to be repaired within 1 year of sale. The company's sales, repair data and actual repair cost is provided in the table below. Please look at the requirements to answer this question below. Warranty Cost and Repair Information for three years Number of Number of Extended Year Actual Number of Actual Reapir Cost for the TV Sold Warranty TV Repaired Year ($) Sold + 2018 2019 2020 Warranty Estimate 1,500 450 200 18,500 1,250 320 250 23,500 1,800 400 300 25,200 Requirement - 1 It is estimated that 5% TVs will require warranty within 1 year of sales. Calculate Warranty Expense and Warranty Liability for the three years and fill in the yellow cells below for assurance type warranty for the company. Year Warranty Expense 2018 2019 2020 Warrnty Liability Full Mark Mark Rcvd 4 4

Answer rating: 100% (QA)

Year 1 Warranty Expense 70 Warranty Liability 70 Year 2 ... View the full answer