Question

The transactions of part A create what balance under current liabilities in the 2017 balance sheet?

Merritt Equipment Company sell computers for $1,760 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2017, the company sold 930 computers on credited on past experience, the company has estimated the per unit 2-year warranty costs as $40 for parts and 560 for labor. Assure sales all occur at December 31, 2017) In 2018 Merritt incurred actual warranty costs relative to 2017 computer sales of $11.200 for parts and $16. 50 for labor Your answer lus been saved se score details after the due date. Under the expense warranty approach pive the entries to reflect the above transactions accrual method for 2017 and 2018 Credit account titles are out the amount is entered Do not indent manually Date Account Titles and Explanation 2017 Arche To record sale of computers) y against warranty costs) To record a 2018 w yth

Answer 1

Current Liabilities are liabilities that are payable within a period of 12 months.

Warranty liability is for 2 years, so 50% is payable within 12 months and 50% is payable after 12 months.

Current Liabilities :

Warranty Liability

46500

=93000*50%