Gladiator USA, a tire manufacturer, guarantees its tires against defects for five years or 60,000...
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Gladiator USA, a tire manufacturer, guarantees its tires against defects for five years or 60,000 miles, whichever comes first. Suppose Gladiator USA can expect warranty costs during the five-year period to add up to 5% of sales. Assume that a Gladiator USA dealer in Denver, Colorado, made sales of $ 643,000 during 2018.
Gladiator USA received cash for 15% of the sales and took notes receivable for the remainder. Payments to satisfy customer warranty claims totaled $ 20,000 during 2018.
Record the sales, warranty expense, and warranty payments for Gladiator USA.
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