**Sales Transaction and Warranty Accounting****Scenario:**On January 2, 2020, Culver Company sold production equipment to Fargo Inc. for $48,000. Included with this sale is a 2-year assurance warranty. The customer received and paid for the equipment on the same date. During 2020, Culver incurred $910 in costs related to warranties. As of December 31, 2020, Culver estimated that an additional $640 in warranty costs would be incurred in the second year of the warranty.**Task:**Prepare journal entries to record this transaction on January 2, 2020, and on December 31, 2020. It is assumed that financial statements are prepared on December 31, 2020.**Instructions:**- Credit account titles are automatically indented when the amount is entered. Do not manually indent.- If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.**Journal Entry Table:**| Date | Account Titles and Explanation | Debit | Credit ||------------|--------------------------------|-------|--------|| [Date] | [Account Title] | | || [Date] | [Account Title] | | || [Date] | [Account Title] | | |**Explanation:**- You will need to identify the appropriate accounts to debit and credit for the sale and the warranty costs.- Consider the matching principle and warranty expense recognition.- Adjust entries based on estimated future costs.**Note:**Ensure accuracy in account selection and amounts to reflect proper accounting standards.

Equipment has a 2-year warranty assurance. So the estimated warranty for 2021 will also be recorded…

On January 2, 2020, Culver Company sells production equipment to Fargo Inc. for $ 48,000. Culver includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Culver incurs costs related to warranties of $910. At December 31, 2020, Culver estimates that $ 640 of warranty costs will be incurred in the second year of the warranty. (a) Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020 (assuming financial statements are prepared on December 31, 2020). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credi

On January 2, 2020, Culver Company sells production equipment to Fargo Inc. for $ 48,000. Culver includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Culver incurs costs related to warranties of $910. At December 31, 2020, Culver estimates that $ 640 of warranty costs will be incurred in the second year of the warranty. (a) Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020 (assuming financial statements are prepared on December 31, 2020). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credi

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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