Question

Exercise 13-11 (Part Level Submission) Early in 2020, Carla Equipment Company sold 600 Rollomatics at $5,500 each. During 2020, Carla spent $19,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. (a) Your answer is partially correct. Try again. Prepare 2020 entries for Carla. Assume that Carla estimates the total cost of servicing the warranties in the second year will be $32,000. (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. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO VIDEO Attempts: 3 of 3 used (b) Prepare 2020 entries for Carla assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, $52,000 relates to sales of warranty contracts.Warranty costs incurred in 2020 were $19,000. Estimate revenues to be recognized on a straight-line basis. (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. Round intermediate calculations to 5 decimal places, e.g. 1.54657 answers to 0 decimal places, e.g. 5,125. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020 At SaleDuring 2020Dec. 31, 2020 (To record warranty revenue) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO VIDEO Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Date	Account Tiltes and Explanation	Debit	Credit
Dec 31 2020	Cash	$ 3,300,000
	Sales (600*5500)		$ 3,300,000
	To record the sale of Rollomatics
Dec 31 2020	Warranty Expense	$      19,000
	Cash		$      19,000
	To record Warranty costs incurred
Dec 31 2020	Warranty Expense (32000-19000)	$      13,000
	Estimated Liability under Warranties		$      13,000
	To accrue estimated warranty costs
Date	Account Tiltes and Explanation	Debit	Credit
Dec 31 2020	Cash	$ 3,300,000
	Sales		$ 3,248,000
	Unearned Warranty Revenue		$      52,000
	To record the sale of Rollomatics
Dec 31 2020	Warranty Expense	$      19,000
	Cash		$      19,000
	To accrue estimated warranty costs
Dec 31 2020	Unearned Warranty Revenue	$      20,000
	Warranty Revenue (52000-13000-19000)		$      20,000
	To recognize revenues earned