Question

Soundgarden Company sold 200 color laser copiers on July 10, 2020, for $4,000 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $330. Instructions Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020. Actual warranty costs (inventory) incurred in 2020 were $17,000.

Answer 1

Explanation: Journal Entries for the sale.

DR: Bank/Cash. $800,000

CR: Sales. $783,000

CR: Warranty on sales. $17,000

Being sales of 200 color printers at $4,000 per piece.

DR: warranty expense. $330

CR: Warrant on sales. $330

Being actual expense incurred on warranty for year 2020

Answer 2

Amount Debit Credit

Cash $800,000

Sales Revenue $800,000

Warranty Expense $17,000

Cash $17,000

Warranty expense $49,000

Warranty liability $49,000

Step-by-step explanation:

Given:

Price For each copier=$4,000

Number of copiers sold=200

Maintenance cost on each copier during warranty=$330

Actual Warranty cost=$17,000

Required:

Prepare entries.

Solution:

Amount Debit Credit

Cash ($4,000*200) $800,000

Sales Revenue ($4,000*200) $800,000

Warranty Expense $17,000

Cash $17,000

Warranty expense[($330*200)-17,000] $49,000

Warranty liability $49,000