Question #1: Limits Incorporated Limits Incorporated [LI] had the following events occur during 2023: On March 1, 2023, LI signed a contract with a customer AIG Limited to manufacture specialized lawn equipment. The contract was signed for $500,000 and AIG paid $150,000 to LI on the date of the signing. Manufacturing and delivery to AIG is expected to begin in October. On On July 2nd, LI sold $200,000 of lawn equipment to PMG for $320,000 cash. The lawn equipment comes with a one-year warranty. Based on history, warranty is expected to average 2% of the selling price of lawn equipment. On November 3rd, LI delivered $75,000 of lawn equipment to AIG. The cost of the equipment manufactured was $38,000. The lawn equipment carries the same warranty as all other lawn equipment. On December 15th some lawn equipment was returned for repair. The parts needed for repair amounted to $1,200, with $200 of labour being utilized to make the repairs. . Required: Prepare journal entries for ALL the events above (all sales, related cost of sales, etc.). Show all work. Assume perpetual inventory and IGNORE sales taxes.
Question #1: Limits Incorporated Limits Incorporated [LI] had the following events occur during 2023: On March 1, 2023, LI signed a contract with a customer AIG Limited to manufacture specialized lawn equipment. The contract was signed for $500,000 and AIG paid $150,000 to LI on the date of the signing. Manufacturing and delivery to AIG is expected to begin in October. On On July 2nd, LI sold $200,000 of lawn equipment to PMG for $320,000 cash. The lawn equipment comes with a one-year warranty. Based on history, warranty is expected to average 2% of the selling price of lawn equipment. On November 3rd, LI delivered $75,000 of lawn equipment to AIG. The cost of the equipment manufactured was $38,000. The lawn equipment carries the same warranty as all other lawn equipment. On December 15th some lawn equipment was returned for repair. The parts needed for repair amounted to $1,200, with $200 of labour being utilized to make the repairs. . Required: Prepare journal entries for ALL the events above (all sales, related cost of sales, etc.). Show all work. Assume perpetual inventory and IGNORE sales taxes.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Question #1: Limits Incorporated
Limits Incorporated [LI] had the following events occur during 2023:
On March 1, 2023, LI signed a contract with a customer AIG Limited to manufacture
specialized lawn equipment. The contract was signed for $500,000 and AIG paid
$150,000 to LI on the date of the signing. Manufacturing and delivery to AIG is expected
to begin in October.
On July 2nd, LI sold $200,000 of lawn equipment to PMG for $320,000 cash. The lawn
equipment comes with a one-year warranty. Based on history, warranty is expected to
average 2% of the selling price of lawn equipment.
On November 3rd, LI delivered $75,000 of lawn equipment to AIG. The cost of the
equipment manufactured was $38,000. The lawn equipment carries the same warranty
as all other lawn equipment.
On December 15th some lawn equipment was returned for repair. The parts needed for
repair amounted to $1,200, with $200 of labour being utilized to make the repairs.
.
.
Required:
Prepare journal entries for ALL the events above (all sales, related cost of sales, etc.). Show all
work. Assume perpetual inventory and IGNORE sales taxes.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F148c6372-dc45-40e6-813d-dd97f6d0becb%2Fa9a6010b-9574-4d23-9f29-b42f42e7c59a%2Frkx4x1s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question #1: Limits Incorporated
Limits Incorporated [LI] had the following events occur during 2023:
On March 1, 2023, LI signed a contract with a customer AIG Limited to manufacture
specialized lawn equipment. The contract was signed for $500,000 and AIG paid
$150,000 to LI on the date of the signing. Manufacturing and delivery to AIG is expected
to begin in October.
On July 2nd, LI sold $200,000 of lawn equipment to PMG for $320,000 cash. The lawn
equipment comes with a one-year warranty. Based on history, warranty is expected to
average 2% of the selling price of lawn equipment.
On November 3rd, LI delivered $75,000 of lawn equipment to AIG. The cost of the
equipment manufactured was $38,000. The lawn equipment carries the same warranty
as all other lawn equipment.
On December 15th some lawn equipment was returned for repair. The parts needed for
repair amounted to $1,200, with $200 of labour being utilized to make the repairs.
.
.
Required:
Prepare journal entries for ALL the events above (all sales, related cost of sales, etc.). Show all
work. Assume perpetual inventory and IGNORE sales taxes.
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