Exercise 18-26 On January 2, 2017, Cullumber Company sells production equipment

Question

Exercise 18-26 On January 2, 2017, Cullumber Company sells production equipment to Fargo Inc. for $55,000. Cullumber includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2017. During 2017, Cullumber incurs costs related to warranties of $940 (Use Parts Expense account). At December 31, 2017, Cullumber estimates that $640 of warranty costs will be incurred in the second year of the warranty Your answer is partially correct. Try again. Prepare the journal entry to record this transaction on January 2, 2017, and on December 31, 2017 (assuming financial statements are prepared on December 31, 2017) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Jan. 2, 2017Accounts Receivable 55,000 Sales Revenue 55,000 During 2017 |Warranty Expense 940 Inventory 940 Dec. 31, 2017 Warranty Expense 640 Warranty Liability 640

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Date Accounts titles and Explanation Debit ($) Credit ($) Jan.2,2017 Cash 55,000 Sales revenue 55,000 During 2017 Warranty expense 940 Cash 940 Dec.31,2017 Warranty expense 640 Warranty Liability 640

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