Question

During 2018, lota sold 600 laptops for $500 each. All laptops comes with a 1-year original...

During 2018, lota sold 600 laptops for $500 each. All laptops comes with a 1-year original warranty. Lota estimated warranty costs will be 3% of sales. By December 31, 2018 lota had spent $2,00 to fix or replace computer cover warranty. Lota collects a 5% sales tax on all laptops sold. Which will be remitted to the government in 2019?

List the current liability associated with this transaction.

Homework Answers

Answer #1
Estimated Warranty liability at the end:
Sales revenue (600*500) 300000
Multiply: Estimated % of Warranty cost 3%
Estimated warranty liability   9000
Less: Actual warranty cost incurred -2000
Estimatd warranty liability at the end 7000
Sales tax Liablities:
Sales revenue 300000
Multiply: % of sales tax collected 5%
Sales tax payable 15000
Current liabilities:
Sales tax payable 15000
Estimated warranty liability 7000
Total Current liabilities 22000
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