a)
Account Titles and explanations | Debit | credit |
Cash ($7,120 × 500) | $3,560,000 | |
Sales | $3,560,000 | |
(To record sales) | ||
Warranty expense | $88,750 | |
Wages and salaries ( 500 × $209 ×50%) | $52,250 | |
Inventory (500 × $146 ×50%) | $36,500 | |
( To record warranty expense) | ||
b) Warranty accural on December 31, 2017
No Journal entry (Cash basis of accounting followed)
C) warranty cost incurred in 2018
Accounts Titles and explanations | Debit | Credit |
Warranty expense | $88,750 | |
Wages and salaries (500 × $209 ×50%) | $52,250 | |
Inventory (500 × $146 ×50%) | $36,500 | |
(To record warranty expense) | ||
d) No liability will be disclosed for future warranty cost as of December 31, 2017 assuming sage company adopt cash basis method of accounting.
Problem 13-7 Sage Company sells a machine for $7,120 with a 12-month warranty agreement that requires...
Kingbird Company sells a machine for $6,840 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 620 machines in 2017 (warranty expense is incurred half in 2017 and half in 2018). As a result of product testing, the company estimates that the warranty cost is $384 per machine ($170 parts and $214...
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Indigo Company sells a machine for $6,970 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 740 machines in 2020 (warranty expense is incurred half in 2020 and half in 2021). As a result of product testing, the company estimates that the warranty cost is $324 per machine ($140 parts and $184...
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Coronado Company sells a machine for $7,080 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 580 machines in 2020 (warranty expense is incurred half in 2020 and half in 2021). As a result of product testing, the company estimates that the warranty cost is $430 per machine ($190 parts and $240...
Splish Company sells a machine for $7,300 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 640 machines in 2017 (warranty expense is incurred half in 2017 and half in 2018). As a result of product testing, the company estimates that the warranty cost is $357 per machine ($148 parts and $209...
Whispering Company sells a machine for $6,720 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 620 machines in 2017 (warranty expense is incurred half in 2017 and half in 2018). As a result of product testing, the company estimates that the warranty cost is $363 per machine ($158 parts and $205...
Whispering Company sells a machine for $6,720 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 620 machines in 2017 (warranty expense is incurred half in 2017 and half in 2018). As a result of product testing, the company estimates that the warranty cost is $363 per machine ($158 parts and $205...
Whispering Company sells a machine for $6,720 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 620 machines in 2017 (warranty expense is incurred half in 2017 and half in 2018). As a result of product testing, the company estimates that the warranty cost is $363 per machine ($158 parts and $205...