FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions:
A. March 31: Emperor provides cleaning services for 17 pools during the month of March at a sales price per pool of $610 cash. Emperor records warranty estimates when sales are recognized and bases warranty estimates on 2 percent of sales.
B. April 5: A customer files a warranty claim that Emperor honors in the amount of $130 cash.
C. April 13: Another customer, J. Jones, files a warranty claim that Emperor does not honor due to customer negligence.
D. June 8: J. Jones files a lawsuit requesting damages related to the dishonored warranty in the amount of $2,300. Emperor determines that the lawsuit is likely to end in the plaintiff's favor and the $2,300 is a reasonable estimate for damages.
Prepare any necessary
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