Question

Grouper Company sold 214 color laser copiers on July 10, 2020, for $3,800 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $303. Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020. Actual warranty costs (inventory) incurred in 2020 were $17,400.

Answer 1

Answer:

1. Dr Cash $813,200

Cr Sales Revenue $813,200

2. Dr Warranty Expense $17,400

Cr Cash $17,400

3. Dr Warranty expense $47,442

Cr Warranty liability $47,442

Explanation:

Preparation of the entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020.

1. Preparation of the entries to record the sale of the copiers

Dr Cash $813,200

($3,800*214)

Cr Sales Revenue $813,200

(Being to record the sale of the copiers)

2. Preparation of the entries to record the related warranty costs

Dr Warranty Expense $17,400

Cr Cash $17,400

(Being to record the related warranty costs)

3. Preparation of the entries to record any accrual

Dr Warranty expense $47,442

[($303*214)-17,400]

Cr Warranty liability $47,442

(Being to record any accrual)