Question

On September 1, Home Store sells a mower (that costs $210) for $510 cash with a one-year warranty that covers parts. Warranty expense is estimated at 7% of sales. On January 24 of the following year, the mower is brought in for repairs covered under the warranty requiring $36 in materials taken from the Repair Parts Inventory.

Prepare the September 1 entry to record the mower sale (and cost of sale) and the January 24 entry to record the warranty repairs. (Round your answers to 2 decimal places.)

1. Record the mower sale in the general journal

2. Record the cost of mower sales

3. Record the estimated warranty expense

4. Record the cost of warranty repairs

Answer 1

Answer:

No	Date	General Journal	Debit	Credit
1	Sep-01	Cash	510
		Sales revenue		510
		To record the mower sale
2	Sep-01	Cost of Goods Sold	210
		Inventory		210
		To record the cost of mower sales
3	Sep-01	Warranty expense	35.70
		Estimated warranty liability		35.70
		To record the estimated warranty expense
4	Jan-24	Estimated warranty liability	36
		Repair parts inventory		36
		To record the cost of warranty repairs

Calculation:

Entry #1. Record the mower sale in the general journal

When sale happens, cash is recieved and so it is debited with the amount of $510

Entry #2. Record the cost of mower sales

The mower costs $210, so we need to debit the Cost of Goods Sold and credit the Inventory

Entry #3. Record the estimated warranty expense

Warranty expense estimated = 7% of sales

So, Warranty expense = 7% x 510 = 35.70

Entry #4. Record the cost of warranty repairs

The mower repairs covered under the warranty = $36. So we need to debit the Estimated warranty liability. And since the materials are taken from the Repair Parts Inventory, we need to credit that