Assuming that in addition to the assurance warranty

Assignment Help Financial Accounting

Reference no: EM131284739

On January 2, 2017, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2017. During 2017, Grando incurs costs related to warranties of $900. At December 31, 2017, Grando estimates that $650 of warranty costs will be incurred in the second year of the warranty.

a. Prepare the journal entry to record this transaction on January 2, 2017, and on December 31, 2017 (assuming financial statements are prepared on December 31, 2017).

b. Repeat the requirements for (a), assuming that in addition to the assurance warranty, Grando sold an extended warranty (service-type warranty) for an additional 2 years (2019–2020) for $800.

Reference no: EM131284739

Questions Cloud

Effect on profit between cash flow hedge-fair value hedge : Read Derivative Accounting Loopholes Inflate Profit.doc and suggest how to change the current hedge accounting so as to close the loopholes. Tip: Identify a differential effect on profit between cash flow hedge and fair value hedge.

Difference between preventive control and detective control : Controls are put in place to minimize risks so that organization's can achieve their objectives. Objectives are typically identified as operations, reporting and compliance. What in general are operational, reporting and compliance objectives? What i..

What is meant by the terms gross risk and residual risk : Don Company is in the precious metals business. A significant part of Don's success has been its willingness to develop gold and silver mines in parts of the world where it is particularly risky to do business. What is meant by the terms gross risk a..

Periodic inventory system and employs average cost method : The following information is taken from the inventory records of the Britain Company: Assume that Britain Company uses a periodic inventory system and employs the average cost method, determine cost of goods sold for April and April’s ending inventor..

Assuming that in addition to the assurance warranty : On January 2, 2017, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2017. Repe..

Services traditionally provided by the government employees : Recently, several states have outsourced some of the services traditionally provided by the government employees. In one state, the department of health and human services(Department) has outsourced its electronic benefit transfer services to eFunds,..

Regard to accommodating hardship situations : Dylan worked for a propane gas distributor as an accounting clerk in a small Midwestern town. Last winter, his brother Mike lost his job at the machine plant. By January, temperatures were sub-zero, and Mike had run out of money. What can a business ..

Who you consider to be an entrepreneur : Describe a person (famous or not) who you consider to be an entrepreneur. You do not have to name the person if this is a personal reference. Thinking about this person what makes them an entrepreneur? What skills do they have that sets them apart fr..

Operate primarily from marketing orientation : There is a major difference between organizations that operate primarily from a production orientation (concept) vs. those that operate primarily from a marketing orientation (concept). Henry Ford is famously rumored to have said "You don't need to a..

User Account

All Pages