Early in 2017, Cullumber Equipment Company sold 400 Rollomatics during 2017 at $
ID: 2527282 • Letter: E
Question
Early in 2017, Cullumber Equipment Company sold 400 Rollomatics during 2017 at $6,600 each. During 2017, Cullumber spent $20,000 servicing the 2-year warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.
Prepare 2017 entries for Cullumber. Assume that Cullumber estimates the total cost of servicing the warranties will be $60,000 for 2 years. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Date
Account Titles and Explanation
Debit
Credit
At SaleDuring 2017Dec. 31, 2017
At SaleDuring 2017Dec. 31, 2017
At SaleDuring 2017Dec. 31, 2017
Explanation / Answer
Date
Account Titles and Explanation
Debit
Credit
At Sale
During 2017
Dec. 31, 2017
Cash
$26,40,000
Sales
$26,40,000
At Sale
During 2017
Dec. 31, 2017
Warranty expense
$20,000
Cash
$20,000
(Warranty costs incurred)
At Sale
During 2017
Dec. 31, 2017
Warranty expense
$40,000
Estimated liability under warranties
$40,000
(To accrue estimated warranty costs)
$26,40,000 = 400 x $6600
$40,000 = $60,000 - $20,000
Date
Account Titles and Explanation
Debit
Credit
At Sale
During 2017
Dec. 31, 2017
Cash
$26,40,000
Sales
$26,40,000
At Sale
During 2017
Dec. 31, 2017
Warranty expense
$20,000
Cash
$20,000
(Warranty costs incurred)
At Sale
During 2017
Dec. 31, 2017
Warranty expense
$40,000
Estimated liability under warranties
$40,000
(To accrue estimated warranty costs)
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