BE$13\mathrm{.}27-$ Using Excel to Record Warranty Transactions

PROBLEM

Swanson Corporation sells home entertainment systems. The corporation also offers to sell its

customers a two$-$year warranty contract as a separate service. The following information pertains

to warranty activity during $2023.$

Warranty contract term $2$

Number $of$ warranty contracts sold $20,000$

Selling price $of$ each warranty contract $$,99$

Warranty servicing costs $$,180,000$

Estimate $of$ future additional warranty costs $$,900,000$

Swanson recognizes warranty revenue based on the proportion of costs incurred out of total

estimated costs.

Student Work Area

Required: Provide input into cells shaded in yellow in this template. Use cell

references to the Problem area or work area as indicated.

Prepare Swanson's journal entries under the revenue approach used for service$-$type

warranties for the following:.

$($a$)$ The sale of warranty contracts

$($b$)$ The cost of servicing the warranties over the two year period

$($c$)$ The recognition of warranty revenue

Total estimated costs

Percentage of revenue to be recognized