Required 1 Required 2 Required 3 Prepare journal entries that summarize sales of the awnings (assume all credit sales) and any aspects of the warranty that recorded during 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 2 3 Record the 2024 sales. Note: Enter debits before credits. Event General Journal 1 Accounts receivable Debit 5,000,000 Credit 5,000,000 Sales revenue Warranty expense Warranty liability Warranty liability Cash Record entry View general journal Clear entry >
Required 1 Required 2 Required 3 Prepare journal entries that summarize sales of the awnings (assume all credit sales) and any aspects of the warranty that recorded during 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 2 3 Record the 2024 sales. Note: Enter debits before credits. Event General Journal 1 Accounts receivable Debit 5,000,000 Credit 5,000,000 Sales revenue Warranty expense Warranty liability Warranty liability Cash Record entry View general journal Clear entry >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Cupola Awning Corporation introduced a new line of commercial awnings in 2024 that carry a two-year warranty against manufacturer’s defects. Based on their experience with previous product introductions, warranty costs are expected to approximate 3% of sales. Sales and actual warranty expenditures for the first year of selling the product were:
| Sales | Actual Warranty Expenditures |
|---|---|
| $ 5,000,000 | $ 37,500 |
Required:
- Does this situation represent a loss contingency?
- Prepare
journal entries that summarize sales of the awnings (assume all credit sales) and any aspects of the warranty that should be recorded during 2024. - What amount should Cupola report as a liability at December 31, 2024?
Transcribed Image Text:Required 1
Required 2
Required 3
Prepare journal entries that summarize sales of the awnings (assume all credit sales) and any aspects of the warranty that
recorded during 2024.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
<
1
2
3
Record the 2024 sales.
Note: Enter debits before credits.
Event
General Journal
1
Accounts receivable
Debit
5,000,000
Credit
5,000,000
Sales revenue
Warranty expense
Warranty liability
Warranty liability
Cash
Record entry
View general journal
Clear entry
>
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