Answer:
Computation of Sales = Price x Quantity
= $4,130 x 186 = $768,180
ENTRIES TO RECORD THE SALES
Debit cash $768,180
Credit Sales $768,180
Being sales of 186 color laser copiers at $,4,130 each
ACCRUAL FOR WARRANTY
Maintenance on each copier during the warranty period is estimated to be $355.
Total provision for warranty = 186 x $355
= $66,030
JOURNAL ENTRIES
Debit Warranty Expenses $66,030
Credit Warranty Liability $66,030
Being provision for warranty for the sales of 186 color laser copiers
ACTUAL WARRANTY COST INCURRED
JOURNAL ENTRIES
Debit Warranty Liability $17,400
Credit Inventory $17,400
Being warranty expenses paid from inventory
Explanation:
ENTRIES TO RECORD THE SALE
Total sales made is price per unit multiplied by the number sold. and the accounting entry is a debit to cash if sold on cash or a debit to receivable if sold on credit.
ACCRUAL FOR WARRANTY
Since maintenance on each copier during the warranty period is estimated to be $355, it means the total provision for warranty will be $355 multiplied by 186 to get $66,030. the journal entries will be a debit to expense for warranty and a corresponding credit to warranty provision account for $66,030
ACTUAL WARRANTY COST INCURRED
Inventory item of $17,400 was given to satisfy the warranty. To record the actual warranty cost incurred, debit warranty liability account and credit the respective inventory account for $17,400.
