Answer:
DR Cash............................................$96,450
DR Notes receivable........................$546,550
CR Sales revenue...................................................$643,000
<em>(To record sales) </em>
DR Warranty expense .............................$32,150
CR Warranty liability.................................................$32,150
<em>(To record Warranty Expense)</em>
DR Warranty liability.................................$20,000
CR Cash......................................................................$20,000
<em>(To record Warranty Claim Payments)</em>
Explanation:
Cash = 15% * $643,000
= $96,450
Notes Receivable = 643,000 - 96,450
= $546,550
Warranty Expense = 5% x $643,000
= $32,150
