Kadom is a company that manufactures all kinds of electrical products. The fiscal year$-$end is January $31,$ and the financial statements are usually finalized around March $31.$ The company's accountant is wondering how to account for the following items:

$1.$On January $31,$ the accountant estimates that warranty costs will be $$25,000$ in the next fiscal year. This amount was fully spent in February, leading the accountant to conclude that he had underestimated the size of the warranty costs. The revised guarantee fee was set at $$35,000.$

$2.$On February $24,$ judgment was finally handed down on a case that had been pending since last year. Kadom was found guilty following the use of parts that did not meet government standards, produced and distributed to the customer in error. Kadom will have to pay $$38,000$ to the plaintiff.

Assignment

Explain the processing required to record the above operations.

Answer rating: 100% (QA)

To record the above operations in Kadoms accounting records the following processing is required 1 R... View the full answer