Early in 2017, Ayayai Equipment Company sold 600 Rollomatics during 2017 at $5,8
ID: 2409736 • Letter: E
Question
Early in 2017, Ayayai Equipment Company sold 600 Rollomatics during 2017 at $5,800 each. During 2017, Ayayai spent $21,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.
Date
Account Titles and Explanation
Debit
Credit
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Date
Account Titles and Explanation
Debit
Credit
(To record warranty revenue)
SHOW LIST OF ACCOUNTS
Early in 2017, Ayayai Equipment Company sold 600 Rollomatics during 2017 at $5,800 each. During 2017, Ayayai spent $21,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.
Explanation / Answer
Date Account Title and Explaination Debit Credit At sales During 2017, Dec. 31, 2017 Cash $ 34,80,000 Sales Revenue $ 34,80,000 (Being sales recorded 600 X $5,800 = $34,80,000) At sales During 2017, Dec. 31, 2017 Warranty Expense $ 21,000 Cash $ 21,000 (Being amount spent on servicing recorded) At sales During 2017, Dec. 31, 2017 Warranty Expense $ 36,000 Estimated Liabilities Warranties $ 36,000 (Being remaining warranty expense estimated $57,000 - $21,000 = $36,000) Date Account Title and Explaination Debit Credit At sales During 2017, Dec. 31, 2017 Cash $ 34,80,000 Sales Revenue $ 34,22,000 Unearned warranty Revenue $ 58,000 (Being sales recorded 600 X $5,800 =34,80,000) At sales During 2017, Dec. 31, 2017 Warranty Expense $ 21,000 Cash $ 21,000 (Being amount spent on servicing recorded) At sales During 2017, Dec. 31, 2017 Unearned warranty Revenue $ 21,368 Warranty Revenue $ 21,368 (Being warranty revenue recorded) [($21,000 / $57,000) * $58,000]
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