Question: Wildhorse Company sells televisions at an average price of $856 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 306 televisions and 256 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 December 31, 2020, and straight-line recognition of warranty revenues occurs.
