Acco 320BWinter 2018 C Ben Ali Assignment 1 Please complete

Acco, 320-B-Winter, 2018- C. Ben Ali Assignment 1 Please complete the assignment and submit it no later than Thursday, February 1, 2018. Late assignments not accepted. You may complete the assignment in a group not exceeding 4 persons Pls ensure each participants\' student number and name appear on the assignment submitted Garage Hardware Ltd. provides a product warranty for defects on two major lines of items sold since the beginning of 20X5. Line A carries a two-year warranty for parts and service, while Line B carries a three- year warranty for parts and service. The warranty cannot be purchased separately, and is intended to provide assurance to customers that the products will op provided. Garage contracts with a local service company to service the warranty on line A, at a cost of $75 per unit payable at the date of sale. Garage performs its own warranty work for Line 8 of experience, Garage estimates that warranty work costs 3% of sales for parts a overhead for the entire three years although it is difficult to assess in which year the costs will likely be erate in accordance with the specifications . On the basis nd 7% for labour and incurred 20x6 1,000 $660 800 $750 Sales in units, Line A Sales price per unit, Line A Sales in units, Line B Sales price per unit, Line 8 Actual warranty costs incurred, Line B: Parts Labour and overhead Required: 700 $610 600 $700 $3,000 $9,600 $12,000 7,000 22,000 30,000 Prepare journal entries for annual sales, expense, and warranty transactions for 20XS to 20x7 inclusive. Because of uncertainty of estimates no discounting is to be applied How much is warranty expense in each year from 20X5 to 20x7? What is the balance in the provision for warranty at December 31, 20x5 through December 31, 1) 2) 3) 20X7? What warranty work is left to do at the end of 20X7? Continued on other side 4)

Solution

1.\'

2.

Warranty expense and liability balance:

.4.

work pending related to warranty for line B is:

Jounral
Year	Account	Debit	Credit
20X5	Cash	4,27,000
	Sales revenue Line A		4,27,000
20X5	Cash	4,20,000
	Sales revenue Line B		4,20,000
20X5	Warranty expense Line A	52,500
	Warranty expense Line B	42,000
	Cash		52,500
	Warranty payable Line B		42,000
20X5	Warranty payable Line B	10,000
	Parts supplies		3,000
	Cash		7,000
20X6	Cash	6,60,000
	Sales revenue Line A		6,60,000
20X6	Cash	6,00,000
	Sales revenue Line B		6,00,000
20X6	Warranty expense Line A	75,000
	Warranty expense Line B	60,000
	Cash		75,000
	Warranty payable Line B		60,000
20X6	Warranty payable Line B	31,600
	Parts supplies		9,600
	Cash		22,000
20X7	Warranty payable Line B	42,000
	Parts supplies		12,000
	Cash		30,000