Question

Marin Company sells televisions at an average price of $887 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 318 televisions and 238 warranty contracts for cash. It estimates the 3-year warranty costs as $22 for parts and $42 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs.

Record any necessary journal entries in 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified?

Marin Company Balance Sheet (Partial)                                                                       December 31, 2020
			$
			$

In 2021, Marin Company incurred actual costs relative to 2020 television warranty sales of $2,190 for parts and $4,010 for labor.

Record any necessary journal entries in 2021 relative to 2020 television warranties. Use "Inventory" account to record the warranty expense. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
(To record the warranty revenue earned.)
(To record the warranty expense.)

What amounts relative to the 2020 television warranties would appear on the December 31, 2021, balance sheet and how would they be classified?

Marin Company Balance Sheet (Partial)                                                                       December 31, 2021
			$
			$

Answer 1

Ansuer's a) Journal Entvy:- particulary Credit Debit Date $304200 Ale dr cash TO saly (318 x$887) To unearned warranty Revenue (238 x$93) Being to recaid salej) $282,066 $22,134 6) Balance Sheet {ravtal):- Current lGaulili tiy - unearned warranty Revenue (22,134/3) Wore warranly Cons assumed to be incurred equally over he 3 yearg period) 후구378 Long term liability:- unearmed warantG revenue 22,134x2/3) $14,756 ©) Journap Entry; Daet partiulars uneamed wamnty Revenue Ale dr $7378 TO warranty Revenue Bling to red4 uwarrauty Rivnue for the year) Credit Debit $7378 dY |수 6,200 Ale warranty enpense To pary Invanlory TO ACCYUed payroll Being to recsd warranty expense for Enventory and labor) A) calomce Sheet (partial):- Current iabili ty! unearned wawanty revenue Longterm iabilitiey: uncarned warranty revenue $ 2,190 $4010 $7,378 4구378