Answer:
J1
Cash $540 (debit)
Cost of Goods Sold $240 (debit)
Sales Revenue $540 (debit)
Inventory $240 (credit)
J2
Warranty Provision $38 (debit)
Direct Materials $38 (credit)
Explanation:
September 1 entries to record the cost and sale of the mower are :
Cash $540 (debit)
Cost of Goods Sold $240 (debit)
Sales Revenue $540 (debit)
Inventory $240 (credit)
The Warranty Expenses is recorded as :
Warranty Expense $32.40 (debit)
Warranty Provision $32.40 (credit)
Warranty = $540 × 6% = $32.40
When the mower is brought i for repairs, the amount of Provision is used as follows :
Warranty Provision $38 (debit)
Direct Materials $38 (credit)
