The Eyes Have It sells custom eyewear with a one-year embedded warranty. Customers may purchase an extended one-year warranty beyond that. During 20X7, the company sold 52,000 pairs of eyeglasses for $1,000,000. Customers who purchased 75 percent of those pairs also purchased the one-year extended warranty. This brought in $200,000 cash.
a. Record the sale of the extended warranties in 20X7.
b. Assume that during 20X9, the company spent $34,000 to repair glasses under the extended warranty. Record this entry.
c. Record the entry Eyes will make when the extended warranties expire.
6. In several past chapters, we have met Heather Miller, who started her own business, Sew Cool. The financial statements for December are shown below. To calculate age of accounts payable, assume that beginning inventory on 6/1/20X8, when Sew Cool started business, was zero. Also, assume that Sew Cool was only in business for 210 days.
Based on the financial statements determine the following:
a. Current ratio
b. Age of accounts payable