50.1K

Verified Solution

Link Copied!

Carnes Electronics sells consumer electronics that carry a 90-day manufacturer's warranty. At the time of purchase, customers are offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes received $444,000 for these extended warranties (approximately evenly throughout the year). Required: 1-a. Does this situation represent a loss contingency? 1.b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that should be recorded during the year. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Does this situation represent a loss contingency? Loss contingency No Req 1A Req 1B > Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 How should it be accounted for? in Revenue is deferred as a liability and warranty expense is computed using the straight-line basis ~ 2021 & Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that should be recorded during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.) No Event General Journal Credit Debit 444,000.00 Accounts receivable Deferred revenue-extended warranties 444,000.00 2 Deferred revenue-extended warranties Revenue-extended warranties

Answer & Explanation Solved by verified expert

See Answer