Answer:
A.
1.Dr Account receivable $6,000,000
Cr Sales $6,000,000
2. Dr warranty expenses $240,000
Cr Etimated warranty liability $240,000
3. Dr Estimated warranty liability $29,000
Cr Cash $29,000
B. $211,000
Explanation:
A. Preparation of journal entries to summarize the sales and any aspects of the warranty for 2021
1.Dr Account receivable $6,000,000
Cr Sales $6,000,000
(To record sales on credit)
2. Dr warranty expenses $240,000
Cr Etimated warranty liability $240,000
[(Warranty costs 1%+ Additional 3%)×$6,000,000)
=4%×$6,000,000
=$240,000
( To record accrued warranty expenses for year 1)
3. Dr Estimated warranty liability $29,000
Cr Cash $29,000
(To record actual warrant expenses)
B.Calculation for the amount that Cap City should report as a liability at December 31, 2021
Etimated warranty liability $240,000
Less Actual expenditure $29,000
Balance December 31, 2021 $211,000
Therefore the amount that Cap City should report as a liability at December 31, 2021 will be $211,000
