Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading...
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Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately 6% of sales. Sales for the month of December are $440,000. Actual warranty expenditures in January of the following year were $15,000. Required: 1. Does this situation represent a contingent liability? 2. & 3. Record the necessary entries in the Journal Entry Worksheet below. 4. What is the balance in the Warranty Liability account after the entries in Parts 2 and 3? Does this situation represent a contingent liability? Does this situation represent a contingent liability? Journal entry worksheet < 1 2 Record the contingent liability for warranties. Note: Enter debits before credits. Transaction 1 General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet 1 2 Record the actual warranty expenditures. Note: Enter debits before credits. Transaction 2 Record entry > General Journal Debit Credit Clear entry View general journal What is the balance in the Warranty Liability account after the entries in Parts 2 and 3? Warranty Liability Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately 6% of sales. Sales for the month of December are $440,000. Actual warranty expenditures in January of the following year were $15,000. Required: 1. Does this situation represent a contingent liability? 2. & 3. Record the necessary entries in the Journal Entry Worksheet below. 4. What is the balance in the Warranty Liability account after the entries in Parts 2 and 3? Does this situation represent a contingent liability? Does this situation represent a contingent liability? Journal entry worksheet < 1 2 Record the contingent liability for warranties. Note: Enter debits before credits. Transaction 1 General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet 1 2 Record the actual warranty expenditures. Note: Enter debits before credits. Transaction 2 Record entry > General Journal Debit Credit Clear entry View general journal What is the balance in the Warranty Liability account after the entries in Parts 2 and 3? Warranty Liability
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1 Does this situation represent a contingency liability Yes it does War... View the full answer
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