Blossom Equipment Company sells computers for $1,540 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 930 computers. Based on past experience, the company has estimated the total 2-year warranty costs as $40 for parts and $60 for labor. (Assume sales all occur at December 31, 2020.) In 2021, Blossom incurred actual warranty costs relative to 2020 computer sales of $12,000 for parts and $18,000 for labor. (a) Under the expense warranty approach, give the entries to reflect the above transactions (accrual method) for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2020 (To record sale of computers) 2020 (To record liability against warranty costs) 2021 > >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Blossom Equipment Company sells computers for $1,540 each and also gives each customer a 2-year warranty that requires the
company to perform periodic services and to replace defective parts. During 2020, the company sold 930 computers.
Based on past experience, the company has estimated the total 2-year warranty costs as $40 for parts and $60 for labor. (Assume
sales all occur at December 31, 2020.)
In 2021, Blossom incurred actual warranty costs relative to 2020 computer sales of $12,000 for parts and $18,000 for labor.
(a)
Under the expense warranty approach, give the entries to reflect the above transactions (accrual method) for 2020 and 2021.
(Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date Account Titles and Explanation
Debit
Credit
2020
(To record sale of computers)
2020
(To record liability against warranty costs)
2021
Transcribed Image Text:Blossom Equipment Company sells computers for $1,540 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 930 computers. Based on past experience, the company has estimated the total 2-year warranty costs as $40 for parts and $60 for labor. (Assume sales all occur at December 31, 2020.) In 2021, Blossom incurred actual warranty costs relative to 2020 computer sales of $12,000 for parts and $18,000 for labor. (a) Under the expense warranty approach, give the entries to reflect the above transactions (accrual method) for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2020 (To record sale of computers) 2020 (To record liability against warranty costs) 2021
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