ACCTG415 Study Guide - Midterm Guide: Net Income, Weighted Arithmetic Mean, Chief Executive Officer
8 Apr 2014
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This exam consists of 4 questions on pages 2 to 12. Please check that you have a complete exam. On january 1, 2013, the company sold 1,000 units for ,000 per unit. Verlander ltd. provides a 2-year parts and labor warranty on each unit sold. The estimated cost of each warranty is whereas a comparable 2-year warranty can be purchased from a third party for ,200. The company expects that 60% of warranty claims will be made in the first year (i. e. , within one year after the sale) and the remaining 40% in the second year. In 2013, verlander ltd. incurred actual warranty costs of ,000 for the 1,000 units sold on january 1, 2013: ,000 for parts and ,000 for labor. The company"s fiscal year ends on december 31. Assuming that verlander ltd. uses the expense approach, prepare all the journal entries required for 2013 for all revenue and warranty transactions.
