Requirement
1. Report these items on Robarge Electronics' balance sheet at June 30, 2018.
First, select the balance sheet accounts. Refer to the information to determine which accounts will be classified as current lia
...
Requirement
1. Report these items on Robarge Electronics' balance sheet at June 30, 2018.
First, select the balance sheet accounts. Refer to the information to determine which accounts will be classified as current liabilities, and which will be classified as
long-term liabilities. Remember, current liabilities are due within one year of the balance sheet date.
Robarge Electronics
Balance Sheet (partial)
June 30, 2018
Account
Current liabilities:
Accrued warranty payable
Current portion of long-term note payable
Interest payable
Unearned sales revenue
Employee withheld income tax payable
FICA tax payable
Total current liabilities
Long-term liabilities:
Note payable
a. Sales of are subject to an accrued warranty cost of %. The accrued warranty payable at the beginning of the year was , and warranty payments
for the year totaled .
$2,000,000 8 $31,000
$56,000
Many companies provide warranties with their products. A warranty guarantees that a company will repair or replace a product or provide a refund for it if it is found to be
defective within a certain period of time. The expense recognition (matching) principle requires a company to record the warranty expense for a product in the same
period that the business records the product's sales revenue. After all, the warranty motivates customers to buy products, so the company must record the warranty
expenses related to the products when they are sold. At the time of the sale, however, the company doesn't know which products are defective. The exact amount of
warranty expense cannot be known with certainty, so the business must estimate warranty expense and the related accrued liability.
Now calculate the warranty expense. The business uses an estimate usually based on prior history. Electronics estimates that warranty costs, or expense, will
be % of sales revenue. (Enter the interest rate as a whole number.
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