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Question 3 Pearl Company sold 201 color laser copiers on July 10, 2017, for $4,230 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $333. Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2017. Actual warranty costs (inventory) incurred in 2017 were $16,250. (If no entry is required, select No Entry for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered D o not indent manually.) Credit Jul. 10, 2017 During 2017 Dec. 31, 2017 Question Attempts: Unlimited SAVE FOR LATER SUBMIT ANSWER 2 9 0 5
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Date Account Titles and Explanation Debit Credit July 10, 2017 Cash / Accounts receivable $850,230 Sales revenue [201 copiers x $4,230 per copier] $850,230 To record sal es revente July 10, 2017 Warranty expense [201 copiers x $333 per copier] $66,933 Warranty Liability Warranty payable S66,933 To record accrued warranty costs During 2017 Warranty Liability Warranty Payable $16,250 Cash Repair Parts $16,250 To record actual warranty costs As per Matching Principle, all expenses related to a revenue shall be recorded in the year in which that revenue is recognized In this case, the sale of copier has been recognized in the year 2017. So, warranty cost related to this sale shall be recorded in the year 2017 itself.

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