Blue Corp sells extended 5-year warranty for $60 per product. On Jan 1, 2020, Blue sold 100 extended warranties and incurred $1,000 related to servicing the warranties during 2020. Assume Brown uses a straight-line basis in the recognition of warranty revenue. Which one of the following is the correct journal entry to record sales of extended warranties? Debit Cash $1,000; Credit Sales revenue $1,000 Debit Cash $6,000; Credit Sales revenue $6,000 Debit Cash $6,000; Credit Deferred warranty revenue $6,000 Debit Cash $1,200; Credit Warranty revenue $1,200

Blue Corp sells extended 5-year warranty for $60 per product. On Jan 1, 2020, Blue sold 100 extended warranties and incurred $1,000 related to servicing the warranties during 2020. Assume Brown uses a straight-line basis in the recognition of warranty revenue. Which one of the following is the correct journal entry to record sales of extended warranties? Debit Cash $1,000; Credit Sales revenue $1,000 Debit Cash $6,000; Credit Sales revenue $6,000 Debit Cash $6,000; Credit Deferred warranty revenue $6,000 Debit Cash $1,200; Credit Warranty revenue $1,200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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