Week 2 Problems

Week 2 Problems - P137 A)Expensewarrantyaccrualmethod 1)...

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P13-7 A) Expense warranty accrual method 1) Cash 4,810,000 Sales ($7400*650) 4,810,000 2) Warranty Expense 120,250 Inventory ($170*(650/2)) 55,250 Accrued payroll ($200*(650/2)) 65,000 3) Warranty Expense 120,250 Estimated Liability under warranties 120,250 4) Estimated Liability under warranties 120,250 Inventory (170*(650/2)) 55,250 Accrued payroll (200*(650/2)) 65,000 B) cash basis method 1) Cash 4,810,000 Sales 4,810,000 2) Warranty Expense 120,250 Inventory (170*(650/2)) 55,250 Accrued payroll (200*(650/2)) 65,000 3)  We cannot record it until it is expensed in 2009.  4) Warranty Expense 120,250 Inventory (170*(650/2)) 55,250 Accrued payroll (200*(650/2)) 65,000 C) The first method of "Expense warranty accrual" discloses future warranty payments. D) Expense warranty accrual method is the actual closest to the actual income since 
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Week 2 Problems - P137 A)Expensewarrantyaccrualmethod 1)...

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