Recording Service-Type Warranty Liability Madison Co. sells merchandise for $250,000 in 2020, along with a two-year warranty (for years 2020 and 2021) for $25 per product. Warranty costs are estimated to be 0.5% of sales. The company sold $2,500 of warranties in 2020 and incurred actual costs of $800 in 2020 related to the warranties. The company uses straight-line recognition of warranty revenue. a. Record the sale of the merchandise and warranties, ignoring the cost of goods sold entry. Assume cash sales. b. Record the warranty service costs for 2020. c. Record the warranty revenue recognized in 2020. Note: List multiple debits or credits (when applicable) in alphabetical order. ง -པ་S, L-12. THLaILIJIL HLEIt2 པྱ" ILaILJ {VTiLTT aPPILaJIL/ "T F'p"THDL"ས་པ་ས་ Account Name Dr. Cr. a. Cash 252,500 Sales Revenue Warranty Revenue b. Warranty Expense C. Warranty Revenue 0 250,000 x * 0 2,500 x " ✓ 、 800 Cash and Payables " 0 800 ÷ * 800 * Warranty Expense 800 x

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10E
icon
Related questions
Question
Do not use Ai
Recording Service-Type Warranty Liability
Madison Co. sells merchandise for $250,000 in 2020,
along with a two-year warranty (for years 2020 and 2021)
for $25 per product. Warranty costs are estimated to be
0.5% of sales. The company sold $2,500 of warranties in
2020 and incurred actual costs of $800 in 2020 related to
the warranties. The company uses straight-line
recognition of warranty revenue.
a. Record the sale of the merchandise and warranties,
ignoring the cost of goods sold entry. Assume cash sales.
b. Record the warranty service costs for 2020.
c. Record the warranty revenue recognized in 2020.
Note: List multiple debits or credits (when applicable) in
alphabetical order.
ง
-པ་S, L-12. THLaILIJIL HLEIt2 པྱ" ILaILJ {VTiLTT aPPILaJIL/ "T F'p"THDL"ས་པ་ས་
Account Name
Dr.
Cr.
a. Cash
252,500
Sales Revenue
Warranty Revenue
b. Warranty Expense
C. Warranty Revenue
0
250,000 x
*
0
2,500 x
"
✓
、
800
Cash and Payables
"
0
800
÷ *
800 *
Warranty Expense
800 x
Transcribed Image Text:Recording Service-Type Warranty Liability Madison Co. sells merchandise for $250,000 in 2020, along with a two-year warranty (for years 2020 and 2021) for $25 per product. Warranty costs are estimated to be 0.5% of sales. The company sold $2,500 of warranties in 2020 and incurred actual costs of $800 in 2020 related to the warranties. The company uses straight-line recognition of warranty revenue. a. Record the sale of the merchandise and warranties, ignoring the cost of goods sold entry. Assume cash sales. b. Record the warranty service costs for 2020. c. Record the warranty revenue recognized in 2020. Note: List multiple debits or credits (when applicable) in alphabetical order. ง -པ་S, L-12. THLaILIJIL HLEIt2 པྱ" ILaILJ {VTiLTT aPPILaJIL/ "T F'p"THDL"ས་པ་ས་ Account Name Dr. Cr. a. Cash 252,500 Sales Revenue Warranty Revenue b. Warranty Expense C. Warranty Revenue 0 250,000 x * 0 2,500 x " ✓ 、 800 Cash and Payables " 0 800 ÷ * 800 * Warranty Expense 800 x
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage