On December 1, Windsor accepted an order from a new customer, Bonita Computers. Bonita has a questionable credit history, so Windsor requires a $12,000 deposit from Bonita in order to begin production on its order. 1. 2. During December, cash sales at Windsor's retail locations totaled $4,922,000, which includes the 7% sales tax Windsor must remit to the state by the fifteenth day of the following month. 3. During the year, Windsor was sued by a competitor for a patent violation. The competitor is claiming that Windsor's liability is $2,950,000. Windsor's attorneys have advised it that it is probable that the court will find for the company's competitor. The attorneys estimate that the liability under the suit could be as little as $118,000 or as much as $590,000. The attorneys do not believe any amount within this range is a better estimate of Windsor's liability than any other amount within the range. 4. Windsor provides one-year warranties on the laptops it sells. During the year, Windsor's laptop sales totaled $118,000,000. Historically, Windsor's warranty liability has been one percent of total sales. Windsor began the year with a warranty liability balance of $940,000. Warranty expenditures during the year were $915,000 for computers sold in prior years and $283,000 for computers sold during the year. These expenditures were recorded as credits to cash and debits to the warranty liability account. Any remaining warranty liability is expected to relate to computers sold during the current year. Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal entries relative to the transactions that would be required to present fair financial statements at December 31. For simplicity, assume that adjusting entries are recorded only once a year on December 31
On December 1, Windsor accepted an order from a new customer, Bonita Computers. Bonita has a questionable credit history, so Windsor requires a $12,000 deposit from Bonita in order to begin production on its order. 1. 2. During December, cash sales at Windsor's retail locations totaled $4,922,000, which includes the 7% sales tax Windsor must remit to the state by the fifteenth day of the following month. 3. During the year, Windsor was sued by a competitor for a patent violation. The competitor is claiming that Windsor's liability is $2,950,000. Windsor's attorneys have advised it that it is probable that the court will find for the company's competitor. The attorneys estimate that the liability under the suit could be as little as $118,000 or as much as $590,000. The attorneys do not believe any amount within this range is a better estimate of Windsor's liability than any other amount within the range. 4. Windsor provides one-year warranties on the laptops it sells. During the year, Windsor's laptop sales totaled $118,000,000. Historically, Windsor's warranty liability has been one percent of total sales. Windsor began the year with a warranty liability balance of $940,000. Warranty expenditures during the year were $915,000 for computers sold in prior years and $283,000 for computers sold during the year. These expenditures were recorded as credits to cash and debits to the warranty liability account. Any remaining warranty liability is expected to relate to computers sold during the current year. Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal entries relative to the transactions that would be required to present fair financial statements at December 31. For simplicity, assume that adjusting entries are recorded only once a year on December 31
Chapter17: The Management Of Cash And Marketable Securities
Section: Chapter Questions
Problem 7P
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Transcribed Image Text:On December 1, Windsor accepted an order from a new customer, Bonita Computers. Bonita has a questionable credit history, so
Windsor requires a $12,000 deposit from Bonita in order to begin production on its order.
1.
2. During December, cash sales at Windsor's retail locations totaled $4,922,000, which includes the 7% sales tax Windsor must remit
to the state by the fifteenth day of the following month.
3. During the year, Windsor was sued by a competitor for a patent violation. The competitor is claiming that Windsor's liability is
$2,950,000. Windsor's attorneys have advised it that it is probable that the court will find for the company's competitor. The
attorneys estimate that the liability under the suit could be as little as $118,000 or as much as $590,000. The attorneys do not believe
any amount within this range is a better estimate of Windsor's liability than any other amount within the range.
4. Windsor provides one-year warranties on the laptops it sells. During the year, Windsor's laptop sales totaled $118,000,000.
Historically, Windsor's warranty liability has been one percent of total sales. Windsor began the year with a warranty liability balance
of $940,000. Warranty expenditures during the year were $915,000 for computers sold in prior years and $283,000 for computers
sold during the year. These expenditures were recorded as credits to cash and debits to the warranty liability account. Any remaining
warranty liability is expected to relate to computers sold during the current year.
Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal entries
relative to the transactions that would be required to present fair financial statements at December 31. For simplicity, assume that
adjusting entries are recorded only once a year on December 31
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