Jupiter Corp. provides at no extra charge a two-year warranty with one of its products, which...
Jupiter Corp. provides at no extra charge a two-year
warranty with one of its products, which was first
sold in 2017. In that year, Jupiter sold products for
$2.5 million and spent $68,000 servicing warranty
claims. At year end, Jupiter estimates that an
additional $420,000 will be spent in the future to
service warranty claims related to the 2017 sales.
Prepare Jupiter's journal entry(ies) to record the sale
of the products, the $68,000 expenditure, and the
December 31 adjusting entry under the assurancetype
warranty approach.
Homework Answers
| Date | Account Titles & Explanation | Debit | Credit |
| 2017 | Cash, A/R etc. | 25,00,000 | |
| Sales Product | 25,00,000 | ||
| 2017 | Warranty Expenses | 68,000 | |
| Cash, Inventory etc. | 68,000 | ||
| Dec 31 2017 | Warranty Expenses | 4,20,000 | |
| Estimated Liability Under Warranties | 4,20,000 |
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Brief Exercise 13-13
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