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Question: Problem 13-14 Larkspur Company must make computations and adjusting entries for the following ind…
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Problem 13-14

Larkspur Company must make computations and adjusting entries for
the following independent situations at December 31, 2018.

1. Its line of amplifiers carries a 3-year
warranty against defects. On the basis of past experience the
estimated warranty costs related to dollar sales are first year
after sale—2% of sales revenue; second year after sale—3% of sales
revenue; and third year after sale—5% of sales revenue. Sales and
actual warranty expenditures for the first 3 years of business
were:

Sales
Revenue

Warranty
Expenditures

2016 $ 771,800 $ 6,740
2017 1,101,400 17,190
2018 1,148,700 59,740

Compute the amount that Larkspur should report as a liability in
its December 31, 2018, balance sheet. Assume that all sales are
made evenly throughout each year with warranty expenses also evenly
spaced relative to the rates above.

Liability should be reported on December 31, 2018 $

Question: Problem 13-14Larkspur Company must make computations and adjusting entries forthe following ind...

2. With some of its products, Larkspur includes
coupons that are redeemable in merchandise. The coupons have no
expiration date and, in the company’s experience, 50% of them are
redeemed. The liability for unredeemed coupons at December 31,
2017, was $8,190. During 2018, coupons worth $41,150 were issued,
and merchandise worth $7,190 was distributed in exchange for
coupons redeemed.

Compute the amount of the liability that should appear on the
December 31, 2018, balance sheet.

Liability should be reported on December 31, 2018 $

Question: Problem 13-14Larkspur Company must make computations and adjusting entries forthe following ind...

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Question: Problem 13-14Larkspur Company must make computations and adjusting entries forthe following ind...

Question: Problem 13-14Larkspur Company must make computations and adjusting entries forthe following ind...

Question: Problem 13-14Larkspur Company must make computations and adjusting entries forthe following ind...

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