Indigo Factory provides a 2-year warranty with one of its products which was first sold in 2025. Indigo sold $951,800 of products subject to the warranty. Indigo expects $121,810 of warranty costs over the next 2 years. In that year, Indigo spent $67,160 servicing warranty claims. Prepare Indigo'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.)
Indigo Factory provides a 2-year warranty with one of its products which was first sold in 2025. Indigo sold $951,800 of products subject to the warranty. Indigo expects $121,810 of warranty costs over the next 2 years. In that year, Indigo spent $67,160 servicing warranty claims. Prepare Indigo'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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Indigo Factory provides a 2-year warranty with one of its products which was first sold in 2025. Indigo sold $951,800 of products
subject to the warranty. Indigo expects $121,810 of warranty costs over the next 2 years. In that year, Indigo spent $67,160 servicing
warranty claims. Prepare Indigo'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.)
Date Account Titles and Explanation
During 2025
12/31/25
(To record payment for warranty costs incurred)
(To record sales)
Debit
Credit
DAND
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