Warranty arrangement. On December 31, 2017, Dieker Company sells equipment to Tabor Inc. for $125,000. Dieker includes a 1- year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2017. Dieker estimates the prices to be $122,000 for the equipment and $3,000 for the cost of the warranty. Instructions (a) Prepare the journal entry to record this transaction on December 31, 2017. (b) Repeat the requirements for (a), assuming that in addition to the assurance warranty, Dieker sold an extended warranty (service type warranty) for an additional 2 years (2019-2020) for $2,000.

Warranty arrangement. On December 31, 2017, Dieker Company sells equipment to Tabor Inc. for $125,000. Dieker includes a 1- year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2017. Dieker estimates the prices to be $122,000 for the equipment and $3,000 for the cost of the warranty. Instructions (a) Prepare the journal entry to record this transaction on December 31, 2017. (b) Repeat the requirements for (a), assuming that in addition to the assurance warranty, Dieker sold an extended warranty (service type warranty) for an additional 2 years (2019-2020) for $2,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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