Calculate the Net Income from a Jeep Sale in 20X4

What is the net income recognized in 20X4 from the sale of a Jeep according to the given data?

Calculating Net Income for a Jeep Sale in 20X4

The data provided from the Jeep dealership includes the following key information:

Sales Price: $500,000
Cost of Goods Sold: $350,000
Extended Warranty Sales Price: $31,000
Estimated Costs for Warranty:
- Standard Warranty: $5,000
- Extended Warranty: $20,000
Actual Cost of Warranty Work Performed:
- Warranty Cost in 20X1: $3,000
- Warranty Cost in 20X2: $3,000
- Warranty Cost in 20X3: $13,000
- Warranty Cost in 20X4: $14,000

First, let's calculate the total warranty revenue:

Total Warranty Revenue: $31,000 + $5,000 = $36,000

Next, we calculate the total warranty costs incurred:

Total Warranty Costs Incurred: $3,000 + $3,000 + $13,000 + $14,000 = $33,000

Now, we can calculate the net income or loss recognized in 20X4:

Net Income or Loss: ($500,000 - $350,000) + $36,000 - $33,000 = $153,000

However, we need to subtract the warranty costs incurred in 20X4 from this calculation to get the net income recognized in 20X4:

Net Income in 20X4: $153,000 - $14,000 = $139,000

Therefore, the net income recognized in 20X4 from the sale of a Jeep is $7,000.

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