Sales for2018 =500×1100=550000
Sales tax = 500×1100×6%=33000
Estimated warranty expense=550000×3%=16500
For 2019 for sales made in 2018 =500×6%×1100=33000 according to matching concept it should be recognised in 2018(year of sale)
For 2019
Sales=800×1100=880000
Sales tax= 880000×6%=52800
Estimated warranty expense = = 880000×3%=26400+ 880000×6%=52800 to be incurred in second year
Journal entries for year 2018 and 2019 reflecting above trasactrans
Date | particulars | debit | credit | |
2018 |
customers account debit To sales To sales tax payable Being sales made on account and sales tax collected |
583000 |
550000 33000 |
|
2018 |
warranty expense account debit To estimated warranty liability Beign estimated warranty recognised |
49500 |
49500 |
|
2018 |
estimated warrenty liability debit To inventory Beign warranty claimed by customers |
2300 |
2300 |
|
2019 |
customers account debit To sales account To sales tax payable Beign sales made on account and sales tax collected |
932800 |
880000 52800 |
|
2019 |
warrenty expense account debit To estimated warranty liability Beign estimated warranty recognised |
79200 |
79200 |
|
2019 |
warranty liability account debit To inventory Beign claims received from customers |
8000 |
8000 |
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