Boston Company sells baked bean making machines and guarantees them for three years. Company experience shows that warranty costs are about 5% of sales. Boston Company made sales of totaling $1,650,000 during 2021. The cost of the machines sold was $1,072,500. For the first quarter ending March 31, 2022, Boston Company paid out $16,550 of costs related to satisfying warranty repairs. In journal provided: a. Record the baked bean making machine sales for 2021 assuming all sales were on account. b. Record the warranty expense for 2021. c. Record the payment of warranty expenses for the quarter-ended March 31, 2022. Assume all expenses are paid in cash for repairs. d. Determine the ending balance in the Estimated Warranty Liability account as of March 31, 2022 if the beginning balance for 2021 was $12,000. General Journal Date Account Debit Credit 2021 a. 1-Dec Accounts Receivable $1,650,00 Sales To record the sales for 2021 Cost of goods sold $1,072,500 To record the cost of goods sold for 2021 b. 01-Dec Warranty Expense $82,500 Estimated warranty liability To record the warranty expense for 2021 2022 c. 31-Mar Estimated warranty liability $16,550 Cash To record the payment of warranty expenses

Boston Company sells baked bean making machines and guarantees them for three years. Company experience shows that warranty costs are about 5% of sales. Boston Company made sales of totaling $1,650,000 during 2021. The cost of the machines sold was $1,072,500. For the first quarter ending March 31, 2022, Boston Company paid out $16,550 of costs related to satisfying warranty repairs. In journal provided: a. Record the baked bean making machine sales for 2021 assuming all sales were on account. b. Record the warranty expense for 2021. c. Record the payment of warranty expenses for the quarter-ended March 31, 2022. Assume all expenses are paid in cash for repairs. d. Determine the ending balance in the Estimated Warranty Liability account as of March 31, 2022 if the beginning balance for 2021 was $12,000. General Journal Date Account Debit Credit 2021 a. 1-Dec Accounts Receivable $1,650,00 Sales To record the sales for 2021 Cost of goods sold $1,072,500 To record the cost of goods sold for 2021 b. 01-Dec Warranty Expense $82,500 Estimated warranty liability To record the warranty expense for 2021 2022 c. 31-Mar Estimated warranty liability $16,550 Cash To record the payment of warranty expenses

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10RE

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Question

Boston Company sells baked bean making machines and guarantees them for three years.
Company experience shows that warranty costs are about 5% of sales. Boston Company made
sales of totaling $1,650,000 during 2021. The cost of the machines sold was $1,072,500.

For the first quarter ending March 31, 2022, Boston Company paid out $16,550 of costs related
to satisfying warranty repairs.

In journal provided:
a. Record the baked bean making machine sales for 2021 assuming all sales were on account.

b. Record the warranty expense for 2021.

c. Record the payment of warranty expenses for the quarter-ended March 31, 2022. Assume all
expenses are paid in cash for repairs.

d. Determine the ending balance in the Estimated Warranty Liability account as of March 31, 2022
if the beginning balance for 2021 was $12,000.

		General Journal
	Date	Account	Debit	Credit
	2021
a.	1-Dec	Accounts Receivable	$1,650,00
		Sales
		To record the sales for 2021
		Cost of goods sold	$1,072,500

		To record the cost of goods sold for 2021

b.	01-Dec	Warranty Expense	$82,500
		Estimated warranty liability
		To record the warranty expense for 2021
	2022
c.	31-Mar	Estimated warranty liability	$16,550
		Cash
		To record the payment of warranty expenses

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