Question

Pronghorn Company sold 218 color laser copiers on July 10, 2020, for $3,690 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $315.

Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020. Actual warranty costs (inventory) incurred in 2020 were $18,670. (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.

Answer 1

Answer
Date	Account Titles and Explanation	Debit	Credit
Jul. 10,2020	Cash	$      804,420		218*3690
	Sales Revenue		$      804,420
	(To record sales of copiers)
During 2020	Warranty expense	$        18,670
	Inventory		$        18,670
	(To record actual warranty expense incurred)
Dec. 31,2020	Warranty expense	$        50,000		(218*315)-18670
	Warranty Liability		$        50,000
	(To record adjustment for estimated Warranty liability)

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