A Company Sells Computers at a Selling Price of $1,800

question 110

Multiple Choice

A company sells computers at a selling price of $1,800 each. Each computer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all computers sold will be returned under the warranty at an average cost of $150 each. During November, the company sold 30,000 computers, and 400 computers were serviced under the warranty at a total cost of $55,000. The balance in the Estimated Warranty Liability account at November 1 was $29,000. What is the company's warranty expense for the month of November?

• A) $26,000
• B) $45,000
• C) $55,000
• D) $60,000
• E) $90,000

Recognize the need for and construct adjusting entries for accrued expenses.

Understand the impact of adjusting entries on financial statements.

Identify and record revenue recognition for subscriptions and other unearned revenue.

Calculate depreciation expense and understand its effect on book value.

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Definitions:

Money Supply

The all-encompassing amount of economic monetary assets at a designated time.

Reserve Requirements

Central bank regulations setting the minimum amount of reserves that must be held by a commercial bank.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from the Federal Reserve's discount window.

Federal Reserve

The Federal Reserve is the central banking system of the United States, responsible for monetary policy, regulating banks, maintaining financial stability, and providing financial services.