Question

On September 11, 2016, Home Store sells a mower for $590 with a one-year warranty that covers parts. Warranty expense is estimated at 10% of sales. On July 24, 2017, the mower is brought in for repairs covered under the warranty requiring $41 in materials taken from the Repair Parts Inventory. Prepare the September 11, 2016, entry to record the mower sale, and the July 24, 2017, entry to record the warranty repairs. (Round your answers to 2 decimal places.)

Answer 1

Answer:

Sep 11

Dr Cash 590.00

Cr Sales 590.00

Dec 31

Dr Warranty expense 59.00

Cr Estimated warranty liability 59.00

July 24

Dr Estimated warranty liability 41.00

Cr Repair parts inventory 41.00

Explanation:

Home Store Journal entry

Sep 11

Dr Cash 590.00

Cr Sales 590.00

Dec 31

Dr Warranty expense (590*10%) 59.00

Cr Estimated warranty liability 59.00

July 24

Dr Estimated warranty liability 41.00

Cr Repair parts inventory 41.00

Answer 2

Answer:

Sep 11 2016      Debit       Credit

Cash                 $590

         Sales                      $590

To record the sales

Sep 11 2016                                  Debit       Credit

Warranty Expense (590×10%)     $59

       Estimated Warranlty Liability                 $59

To record  Estimated Warranlty Liability

July 24 20167                                 Debit       Credit

Estimated Warranlty Liability          $41

       Repair Parts inventory                            $41

Explanation:

The entry to record the mower sale, and the July 24, 2017, entry to record the warranty repairs would be as follows:

Sep 11 2016      Debit       Credit

Cash                 $590

         Sales                      $590

To record the sales

Sep 11 2016                                  Debit       Credit

Warranty Expense (590×10%)     $59

       Estimated Warranlty Liability                 $59

To record  Estimated Warranlty Liability

July 24 20167                                 Debit       Credit

Estimated Warranlty Liability          $41

       Repair Parts inventory                            $41