Recognize revenues and expenses of such extended warranties

Assignment Help Financial Accounting

Reference no: EM131258141

ABC Stores offers customers purchasing its appliances separately priced (extended) warranties. ABC services these extended warranties. Its customers can receive no refunds for not using these warranties, and, of course, ABC must honor these contracts—regardless of any future costs in doing so. It also “tracks” the profits and losses these types of warranties generate by appliance category—in order to help maintain a competitive price and costing structures. How should ABC recognize the revenues and expenses of such extended warranties?

Reference no: EM131258141

Questions Cloud

Trade accounts payables net of any cash discounts : The Sanchez Company records it trade accounts payables net of any cash discounts. At the end of 2016, Sanchez had a balance of $200,000 in its trade accounts payable excluding the following items: Which of the following dividends are not considered c..

What is the rebate expense and liability-respectively : A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2016. Historically 10% of the customers mail in the rebate forms. During 2016, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to custome..

Although the manufacturing equipment is perfectly functional : Elliott Incorporated manufactures garden tools, and although the manufacturing equipment is perfectly functional, it is not modern. Upgrading to modern equipment would speed up the manufacturing process such that direct labor and variable manufacturi..

Which payroll tax is imposed on both employee and employer : Which payroll tax is imposed on both the employee and employer? Trent, Inc. is a retail store operating in a state with a 5% retail sales tax. The state law provides that the retail sales tax collected during the month must be remitted to the state d..

Recognize revenues and expenses of such extended warranties : ABC Stores offers customers purchasing its appliances separately priced (extended) warranties. ABC services these extended warranties. Its customers can receive no refunds for not using these warranties, and, of course, ABC must honor these contracts..

Unsecured by the proprietor personal residence : Why is it important if a Sole Proprietor takes out a home equity loan and the loan is secured or unsecured by the proprietor's personal residence? To support your answer, you can assume a sole proprietor borrowed $110,000 as a home equity loan at 4% ..

Physical controls employed in the expenditure cycle : Identify six classes of physical controls employed in the expenditure cycle and give one example of each. The operating cycle of a company:

Prepare balance sheet-estimate of profitability ranges : William Murray achieved one of his life-long dreams by opening his own business, The Caddie Shack Driving Range, on May 1, 2017. He invested $19,600 of his own savings in the business. He paid $6,650 cash to have a small building constructed to house..

Difference between limited partnership and liability company : Create a table listing the differences between a limited partnership and a limited liability company. Identify those activities in which a limited partner may engage without forfeiting limited liability.

User Account

All Pages