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
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
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