question archive Pett Shoppe, Inc
Pett Shoppe, Inc., manufactures and sells electronic leashes for dogs. Each leash sells for $15 and carries a two-year warranty (included in the price). During 2020, the company sold $ 750,000 worth of products. It estimated that 2% of the revenues represented the warranty portion. 40% of this amount related to 2020, and the balance to 2021. Assume that Pett Shoppe incurred actual costs of $5.500 to service the warranties in 2020.
What is the warranty revenue, the warranty expense and the unearned warranty revenue that the company would report in its financial statements of 2020?