Cole Electronikz Inc Transactions and Adjustments For 2017
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Cole Electronikz Inc Transactions and Adjustments For 2017
Question Description
Cole Electronikz, Inc., also distributes computers produced by a national manufacturer. Cole guarantees its products for the period from the date of purchase to the end of the year of purchase with an assurance type warranty issued by the manufacturer.
Thus, for example, a computer purchased on August 1, 2017 would be covered till December 31, 2017 with the manufacturer’s assurance-type contract. Since Cole will be reimbursed by the manufacturer for all repair costs incurred during this period, it makes no provisions for liabilities on this contract.
Further, it also offers an extended service-type warranty contract covering all repair costs, including parts and labor, for a 3-year period commencing on January 1 of the year following the year of purchase. Thus, for example, a computer purchased on August 1, 2017 with an extended warranty contract will be covered for the 3-year period commencing January 1, 2018.
This extended contract is optional and the customer can buy it by paying an additional amount of $200 at the time of purchasing the computer. The company estimates that the service-type warranty will be used 40% in the first year of coverage, 35% in the second year, and 25% in the third year of the contract coverage.
During 2017, the year in which the computers were sold, the company also sold 10,000 service-type warranties at a cash price of $200 per contract. During the following year, the company incurred $45,000 in actual warranty claims that are now covered only under the service-type warranty contracts.
The repair costs consisted of $31,000 in parts issued by Cole and $14,000 in labor costs which were paid in cash to Joe Fix-O. Cole did not incur any actual repair costs in 2017 on the sales covered by the assurance-type warranty.
REQUIRED:
Present all journal entries to be prepared, in proper format, in 2017 in order to record all of the warranty related transactions and adjustments for 2017.
Present all journal entries to be prepared, in proper format, in 2018 in order to record all of the transactions related to the extended warranty contracts that were sold in 2017.
What would be the gross profits for 2018 reported by Cole on the extended warranties?
Present the journal entries to be prepared, in proper format, in 2019 in order to record only the revenues related to the extended warranties of 2017. 5. How would the extended warranty liabilities be reported, showing the amounts and how would these be classified, on the Balance Sheets dated
December 31, 2017?
December 31, 2018?
December 31, 2019?
December 31, 2020?
Cole
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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Cole Electronikz Inc Transactions and Adjustments For 2017