Rich Company sells yachts. The yachts have a standard two year warranty included in the...
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Rich Company sells yachts. The yachts have a standard two year warranty included in the sales price and an optional additional two-year extended warranty available for purchase. Tiger Woods bought 1 yacht on January 1, 20X1, information on the sale is below. He bought the extended warranty.
| Sales price | 6,000,000 |
| Cost of goods sold | 5,106,000 |
| Extended warranty sales price | 408,000 |
Estimated costs for warranty
| Standard warranty | 168,000 |
| Extended warranty | 265,000 |
Actual cost of warranty work performed
| Warranty cost in 20X1 | 69,000 |
| Warranty cost in 20X2 | 77,000 |
| Warranty cost in 20X3 | 155,000 |
| Warranty cost in 20X4 | 188,000 |
Assuming no taxes, what is the net income (revenues less expenses) recognized in 20X3 from this sale?
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