Jeep dealership reported the following information. The jeeps have a standard 2-year warranty, and the company offers
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Jeep dealership reported the following information. The jeeps have a standard 2-year warranty, and the company offers an extended warranty. Jeep sales were all in Year 20X1. Standard Warranty covers 20X1 and 20X2; Extended Warranty covers 20X3 and 20X4. Everyone bought the extended warranty at the time of sale.
Sales price | 500,000 |
Cost of goods sold | 350,000 |
Extended warranty sales price | 31,000 |
Estimated costs for warranty
Standard warranty | 5,000 |
Extended warranty | 20,000 |
Actual cost of warranty work performed
Warranty cost in 20X1 | 3,000 |
Warranty cost in 20X2 | 3,000 |
Warranty cost in 20X3 | 13,000 |
Warranty cost in 20X4 | 14,000 |
Assuming no taxes, what is the net income or (loss), revenues less expenses, recognized in 20X1 from this sale?
Related Book For
Intermediate Accounting
ISBN: 978-1119048541
11th Canadian edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
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