Sandhill Company sells televisions at an average price of $925
and also offers to each customer a separate 3-year warranty
contract for $93 that requires the company to perform periodic
services and to replace defective parts. During 2020, the company
sold 288 televisions and 248 warranty contracts for cash. It
estimates the 3-year warranty costs as $21 for parts and $41 for
labor, and accounts for warranties separately. Assume sales
occurred on December 31, 2020, and straight-line recognition of
warranty revenues occurs.
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