Prepare the 2023 entries for Bramble assuming that the warranties are not an integral part of the sale, but rather a separate service that is considered to be bundled with the selling price. Use the service-type (revenue-based) approach for warranties. Assume that, of the sales total, $167,600 is identified as relating specifically to sales of warranty contracts. Bramble estimates the total cost of servicing the warranties will be $125,600 for two years. Because the repair costs are not incurred evenly, warranty revenues are recognized based on the proportion of costs incurred out of the total estimated costs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Accounts Receivable Unearned Revenue Sales Revenue (To record sales on account) Warranty Expense Cash (To record payment of warranty expense) Debit 3250000 31400 Credit 167600 3082400 31400
Prepare the 2023 entries for Bramble assuming that the warranties are not an integral part of the sale, but rather a separate service that is considered to be bundled with the selling price. Use the service-type (revenue-based) approach for warranties. Assume that, of the sales total, $167,600 is identified as relating specifically to sales of warranty contracts. Bramble estimates the total cost of servicing the warranties will be $125,600 for two years. Because the repair costs are not incurred evenly, warranty revenues are recognized based on the proportion of costs incurred out of the total estimated costs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Accounts Receivable Unearned Revenue Sales Revenue (To record sales on account) Warranty Expense Cash (To record payment of warranty expense) Debit 3250000 31400 Credit 167600 3082400 31400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Prepare the 2023 entries for Bramble assuming that the warranties are not an integral part of the sale, but rather a separate
service that is considered to be bundled with the selling price. Use the service-type (revenue-based) approach for warranties.
Assume that, of the sales total, $167,600 is identified as relating specifically to sales of warranty contracts. Bramble estimates the
total cost of servicing the warranties will be $125,600 for two years. Because the repair costs are not incurred evenly, warranty
revenues are recognized based on the proportion of costs incurred out of the total estimated costs. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts.)
Account Titles and Explanation
Accounts Receivable
Unearned Revenue
Sales Revenue
(To record sales on account)
Warranty Expense
Cash
(To record payment of warranty expense)
Unearned Revenue
Debit
3250000
31400
Credit
167600
3082400
20
31400
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