During 2019 Canada Computer Company sold computers for $100,000which includes a 2-year warranty. Warranties sold separately for $70,000 that requires the company to perform periodic services and to replace defective parts. In 2020, Canada Computer Company incurred actual warranty costs relative to 2019 computer sales of $5,000 for parts and $12,000for labor.

Instructions

(a) Using the revenue warranty approach, prepare the entries to reflect the above transactions for 2019 and 2020. assuming Canada co. earn any unearned warranties equally over warranty life.

(b) The transactions of part (a) create what balance undercurrent liabilities in the Dec 31, 2019 balance sheet?

Answer rating: 100% (QA)

Answer Solution Journal Entries 2019 Accounts Rece... View the full answer