hcclcctive tüher Required Prepare an income statement and statement of cash flow

Question

hcclcctive tüher Required Prepare an income statement and statement of cash flows for Daun's first year of operat Based on the information given, what is Daun's total warranties liability at the end of th accounting Exercise 9-7A Effect of warranty obligations and payments on financial statements The Chair Company provides a 120-day parts-and-labor warranty on all merchandise Chair Company estimates the warranty expense for the current period to be $2,650. During the period a customer returned a product that cost $1.830 to repair. it sells. The Required a. Show the effects of these transactions on the financial statements using a horizontal state- ments model like the example shown here. Use + for increase,-for decrease, and NA for

Explanation / Answer

Assets = Liab + Equity Rev - Exp= Net Inc Cash flow Booking provision 2650 -2650 2650 OA Booknig warranty cost incurred -1830 1830 -1830 OA Debit Credit b) Warranty expenses $        2,650 Warranty payable $        2,650 c) Warranty payable $        1,830 Repair expenses $        1,830 d) It is done basis matching concept. Expenses related to sales made should be recorded in the period in which sale is made to correctly estimate the profitability.

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