Question

Ivanhoe Factory provides a 2 year warranty with one of its products which was first sold in 2020. Ivanhoe sold $1,010,100 of products subject to the warranty. Ivanhoe expects $113,910 of warranty costs over the next 2 years. In that year, Ivanhoe spent $63,100 service warranty cains. Prepare Ivanhoe's Journal entry to record the sales (Ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. Of no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when amount entered. Do not indent manually) Date Account Titles and Explanation Debit Credit 2020 (To record sales) During 2020 (To record warranty claims) 12/31/20

Answer 1

Date	Account title	Debit	Credit
2020	Cash	$     1,010,100
	Sales		$     1,010,100
	[to record sales]
During 2020	Warranty expense	$    63,100.00
	Inventory		$          63,100
	[To record warranty claims]
12/31/20.	Warranty expense	$    50,810.00
	Warranty payable		$          50,810
	[adjustment entry for expected claims] [$113,910 - $63,100 = $50,810]