02-Homework i The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which...
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02-Homework i The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical's fiscal year ends on December 31. Financial statements are issued in April 2025. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 2% of sales. Sales were $3.9 million (all credit) for 2024 . Actual warranty expenditures were $32,700 and were recorded as warranty expense when incurred. Although no customer accounts have been shown to be uncollectible. Classical estimates that 2% of credit sales will eventually prove uncollectible. In December 2024, the state of Tennessee filed suit against Classical
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