LIABILITIES REVIEW PROBLEMS

LIABILITIES REVIEW PROBLEMS - LIABILITIES & CAPITAL...

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PROBLEM #1 Your friend, Ben Jerry, approaches you for advice regarding the 2010 financial statements of his company, Icy Delights. He has entered into the following transactions has would like some assistance as how to they will impact his financial statements. Ben Jerry prepares its financial statements under the Canadian Generally Accepted Accounting Principles (Canadian GAAP). Each of the following transactions are independent. 1) On January 1,2010, Ben started a new product line, Icy Machines (ice-cream manufacturing equipment). During the year he sold 20,000 machines for $3,000 each. Included in the sale price was a three-year warranty. Based on industry averages, Ben estimates that it will cost $300 to service each warranty. Actual costs to service the warranty in 2010 were $90 per machine. In addition, 10,000 of the machines were sold with two-year extended warranties. The extended warranty is sold for $600. Ben would like to know how to account for the warranties in 2010, and specifically, what his
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This note was uploaded on 11/23/2011 for the course MGCR 2049 taught by Professor Edwardbierbrier during the Fall '10 term at McGill.

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LIABILITIES REVIEW PROBLEMS - LIABILITIES & CAPITAL...

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