Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions, and prepare any necessary journal entries for each situation. Cash Warranty Liability Legal Liability Legal Expense Service Revenue Warranty Expense PLEASE NOTE: You will enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars using "$" with commas as needed (i.e. $12,345). If no account name is needed, please use "None" and if no dollar amount is needed, please use "$0" - no quotation marks for either. March 31: Emperor provides cleaning services for fifteen pools during the month of March at a sales price per pool of $550 cash. Emperor records warranty estimates when sales are recognized and bases warranty estimates on 2% of sales. Provide both journal entries. DR CR DR CR April 5: A customer files a warranty claim that Emperor honors in the amount of $100 cash. DR CR April 13: Another customer, J. Jones, files a warranty claim that Emperor does not honor due to customer negligence. DR CR June 8: J. Jones files a lawsuit requesting damages related to the dishonored warranty in the amount of $1,500. Emperor determines that the lawsuit is likely to end in the plaintiff’s favor and the $1,500 is a reasonable estimate for damages. DR CR

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions, and prepare any necessary journal entries for each situation.

Cash	Warranty Liability	Legal Liability
Legal Expense	Service Revenue	Warranty Expense

PLEASE NOTE: You will enter the account names exactly as written above and all dollar amounts will be rounded to whole dollars using "$" with commas as needed (i.e. $12,345). If no account name is needed, please use "None" and if no dollar amount is needed, please use "$0" - no quotation marks for either.

March 31: Emperor provides cleaning services for fifteen pools during the month of March at a sales price per pool of $550 cash. Emperor records warranty estimates when sales are recognized and bases warranty estimates on 2% of sales. Provide both journal entries.
DR

CR
DR

CR
April 5: A customer files a warranty claim that Emperor honors in the amount of $100 cash.
DR

CR
April 13: Another customer, J. Jones, files a warranty claim that Emperor does not honor due to customer negligence.
DR

CR
June 8: J. Jones files a lawsuit requesting damages related to the dishonored warranty in the amount of $1,500. Emperor determines that the lawsuit is likely to end in the plaintiff’s favor and the $1,500 is a reasonable estimate for damages.
DR

CR

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