Question

On January 1, 2020, Ivanhoe Ltd. sold on account 1,200 units of its product for a total price of $567,0000 and a cost of $489,000. The products have a one- year assurance-type warranty and Ivanhoe estimates that the cost will be $22,000. By the company's year-end December 31, 2020, actual warranty costs related to the products sold was $17,200, paid in cash. Prepare all appropriate journal entries including the sale of merchandise. (Credit account titles are automatically indented when the amount is entered Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Date 567000 January 1/20 Accounts Receivable Warranty Expense 22000 22000 Warranty Liability 567000 Sales Revenue (To record the sale) 489000 Cost of Goods Sold January 1/20 489000 Inventory (To record the cost of goods sold) 17200 cash December 31/20 17200 Accounts Receivable (To record warranty costs)

Answer 1

Journal Entries: Date January 1, 2020 Credit Debit $567,000 $22.000 Account Titles and Explanation Accounts receivable Warranty expense Warranty Liability Sales revenue (To record the sale) $22.000 $567,000 January 1, 2020 $489,000 Cost of goods sold Inventory (To record the cost of goods sold) $489,000 $22,000 December 31, 2020 Warranty Liability Warranty expense $4,800 $17,200 cash (To record warranty costs)