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1. Leppard Corporation sells DVD players. The corporation also offers its customers a 2-year warranty contract. During 2010, Leppard sold 20,000 warranty contracts at $99 each. The corporation spent $180,000 servicing warranties during 2010, and it estimates that an additional $900,000 will be spent in the future to service the warranties. Prepare Leppard's journal entries for
(a) The sale of contracts,
(b) The cost of servicing the warranties, and
(c) The recognition of warranty revenue.
Smith Corporation reports the following information: Net income $500,000 Depreciation expense 140,000 Increase in accounts receivable 60,000 Smith should report cash provided by operating activities of:
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