To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first
Question:
To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for $250,000 and sold them for $360,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3 percent of sales. During the year she paid $3,920 cash to replace a defective tuner. |
Required |
Prepare an income statement and statement of cash flows for Daun’s first year of operation. (Statement of Cash Flows only, items to be deducted must be indicated with a negative amount.) | ||||||||||||||||||||||||||||||||||||||||||||||
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What is Daun’s total warranty liability at the end of the accounting period? |
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds