Question

Tamarisk Company sold 9,800 Super-Spreaders on December 31, 2020, at a total price of $970,200, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $499,800. The assurance warranties extend for a 2-year period and are estimated to cost $43,500. Tamarisk also sold extended warranties (service-type warranties) related to 2,200 spreaders for 2 years beyond the 2-year period for $13,200. Given this information, determine the amounts to report for the following at December 31, 2020: sales revenue, warranty expense, unearned warranty revenue, warranty liability, and cash.

Amounts Reported in Income
Sales revenue		$
Warranty Expense
Amounts Reported on the Balance Sheet
Unearned Service Revenue		$
Cash
Warranty Liability

Answer 1

Answer
Amounts Reported in Income
Sales Revenue	$          970,200
Warranty Expense	$            43,500
Amounts Reported on the Balance Sheet
Unearned Service Revenue	$            13,200
Cash ($970,200 + $13,200)	$          983,400
Warranty Liability	$            43,500
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