Warranties Alaska Computer Company Sells Computers for $ 2,000 Each, Which

question 29

Essay

Warranties
Alaska Computer Company sells computers for $ 2,000 each, which includes a 3-year warranty that requires the company to perform periodic services and to replace defective parts. During 2020, Alaska sold 500 computers on account. Based on past experience, the company has estimated the total 3-year warranty costs at $ 80 for parts and $ 100 for labour. (Assume sales all occur at December 31, 2020.)
In 2021, Alaska Computer Company incurred actual warranty costs relative to 2020 computer sales of $ 10,000 for parts and $ 12,000 for labour.
Instructions
a) Using the expense warranty approach, prepare the entries to reflect the above transactions (accrual method) for 2020 and 2021.
a) create what balance under current liabilities in the 2020 statement of financial position?
b) Using the cash basis method, what are the Warranty Expense balances for 2020 and 2021?
c) The transactions of part

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Definitions:

Sampling Distribution

The probability distribution of a statistic obtained through a large number of samples drawn from a specific population.

Proportion

A statistical measure that represents the fraction of the total number of outcomes that share a particular attribute or characteristic.

Simple Random Sample

A subset of individuals chosen from a larger set where each member has an equal chance of being selected.

Undergraduates

Students pursuing their first degree in a higher education institution, typically leading to a bachelor's degree.