Blue Factory provides a 2-year warranty with one of its products which was first sold in 2025. Blue sold $955,800 of products subject to the warranty. Blue expects $136,410 of warranty costs over the next 2 years. In that year, Blue spent $64,790 servicing warranty claims. Prepare Blue's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Date During 2025 12/31/25 Cash Warranty Expense (To record payment for warranty costs incurred) Sales Revenue Warranty Llability (To record sales) Warranty Llability Inventory Debit 955800 136410 10 00 64790 Credit 100 955800 136410 64790

Blue Factory provides a 2-year warranty with one of its products which was first sold in 2025. Blue sold $955,800 of products subject to the warranty. Blue expects $136,410 of warranty costs over the next 2 years. In that year, Blue spent $64,790 servicing warranty claims. Prepare Blue's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Date During 2025 12/31/25 Cash Warranty Expense (To record payment for warranty costs incurred) Sales Revenue Warranty Llability (To record sales) Warranty Llability Inventory Debit 955800 136410 10 00 64790 Credit 100 955800 136410 64790

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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