Sunnyvale Computer Company Sells a Line of Computers That Carry

question 140

Essay

Sunnyvale Computer Company sells a line of computers that carry a six-month warranty. Customers are offered the opportunity to buy a two-year extended warranty for an additional charge. During 2013, Sunnyvale received $320,000 from customers for these extended warranties. All sales are on credit, and funds are received evenly throughout the year and the warranties go into effect immediately after purchase.
Required:
Prepare a summary journal entry to record sales of the extended warranties. Also prepare any other entries associated with the warranties that should be recorded during 2013.

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Definitions:

Additional Taxes

Taxes levied in addition to the basic tax rate on income, property, or goods.

Globalization Of Production

The process of firms expanding their operations by developing the international organization of their product supply chains.

National Differences

Variations in cultural, economic, legal, and political systems across countries that can affect how businesses operate internationally.

Cost And Quality

Describes the relationship between the cost of producing a good or service and its quality, often indicating that higher quality can lead to higher production costs.