instructions: a) prepare 2010 entries for Selzer using the expense warranty appr
ID: 2353972 • Letter: I
Question
instructions:a) prepare 2010 entries for Selzer using the expense warranty approach. assume that Selzer estimates the total cost of servicing the warranties will be $120,000 for 2 years.
b) prepare 2010 entries for Selzer assuming that the warranties are not an integral part of the sale. assume that of the sales total, $160,000 relates to sales of warranty contracts. selzer estimates the total cost of servicing the warranties will be $120,000 for 2 years. estimate revenues earned on the basis of costs incurred an estimaed costs.
Explanation / Answer
XX-XX-XX Cash Dr 3,000,000 Sales Cr 3,000,000 To record sales (6000x$500) XX-XX-XX Warranty Expense Dr 120,000 Warranty Liability Cr 120,000 To record estimated warranty cost for 2 yrs...................Ans (a) XX-XX-XX Cash Dr 3,000,000 Sales Cr 2,840,000 Warranty contract Cr $160,000 To record sales (6000x$500) less Warranty contract charges XX-XX-XX Warranty Expense Dr 120,000 Warranty Contract Cr 120,000 To record estimated warranty cost for 2 yrs...................Ans (b)
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