alberta compute company sells computers for $2,000 each which includes a 3-year warranty that requires the company to perform periodic service and to replace defective part. during 2017, alberta sold 500 computers on account.based on experience, the company has estimated the total year 3-year warranty costs at $80 for parts and $100 for labour.( assume sales all occur at december 31, 2017.)

in 2018 , alberta computer company incurred actual warranty costs relative to 2017 computer sales of $10,000 for parts and $12,000 for labour.

Instruction

a) using the assurance type (expense based) approach, prepare the entries to reflect the above transactions for 2017 and 2018.

b) usingthe the cash basis method, what are the warranty expense balances for 2017 and 2018?

c) the transactions of part a) create what balance under current liabilities in the 2017 statement of financial position?