Question

Record the​ sales, warranty​ expense, and warranty payments for the company. Ignore cost of goods sold.

2.

Assume the Estimated Warranty Payable is​ $0 on January​ 1,

20182018.

Post the

20182018

transactions to the Estimated Warranty Payable​ T-account. At the end of

20182018​,

how much in Estimated Warranty Payable does the company​ owe?

GladiatorGladiator

guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately

3 %3%

of sales. Assume that the

GladiatorGladiator

dealer in Colorado Springs made sales totaling

$ 750 comma 000$750,000

during

20182018.

The company received cash for

5050​%

of the sales and notes receivable for the remainder. Warranty payments totaled

$ 12 comma 000$12,000

during

20182018.

Read the requirements

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.

Requirement 1. Record the​ sales, warranty​ expense, and warranty payments for the company. Ignore cost of goods sold. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Begin with the entry to record the sales. ​(Prepare a single compound entry for this​ transaction.)

Date			Accounts and Explanation	Debit	Credit
2018

Record the warranty expense.

Date			Accounts and Explanation	Debit	Credit
2018

Record the warranty payments for the company.

Date			Accounts and Explanation	Debit	Credit
2018

Requirement 2. Assume the Estimated Warranty Payable is​ $0 on January​ 1,

20182018.

Post the

20182018

transactions to the Estimated Warranty Payable​ T-account. At the end of

20182018​,

how much in Estimated Warranty Payable does the company​ owe?

Use the​ T-account to determine the ending balance for the Estimated Warranty Payable account. Use a​ "Beg. Bal." posting reference to show the beginning balance of the account and an​ "End. Bal." posting reference to show the ending balance of the account.​ (Enter a​ "0" for any zero​ amounts.)

Estimated Warranty Payable

Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Entry to record the sales.
Date			Accounts and Explanation	Debit	Credit
2018
			Cash Accounts	375,000.00
			Notes Receivables	375,000.00
			To Sales		750,000.00
			(Being sales recorded whereas received cash for 50​% of the sales and notes receivable for the remainder)

Entry for warranty expense.
Date			Accounts and Explanation	Debit	Credit
2018
			Warranty Expense a/c	12,500.00
			To Warranty liability a/c		12,500.00
			Being warranty expense at the rate of 3% of sales calculated, actual expense paid reduced and the balance accrued 2018

Entry for warranty payments made
Date			Accounts and Explanation	Debit	Credit
2018
			Warranty Expense a/c	12,000.00
			To Cash/Inventory a/c		12,000.00
			Being warranty payments made during the year recorded

Warranty Liability Account
Debit			Credit
Date	Description	Amount	Date	Description	Amount
Unknow	To Cash (Warranty expense incurred during the year	12,000.00	01-01-18	Opening balance	0
			Unknow	Warranty Expense	22,500.00
				(Warranty Payable for Sales during the year)
		12,000.00			22,500.00
			12/31/2018	Estimated Warranty Payable	10,500.00