On September 11, 2014, Home Store sells a mower for $530 with a one-year warrant

Question

On September 11, 2014, Home Store sells a mower for $530 with a one-year warranty that covers parts. Warranty expense is estimated at 7% of sales. On July 24, 2015, the mower is brought in for repairs covered under the warranty requiring $37 in materials taken from the Repair Parts Inventory. Prepare the September 11, 2014, entry to record the mower sale, and the July 24, 2015, entry to record the warranty repairs. (Round your answers to 2 decimal places.) 1) Record the mower sales. 2)Record the estimated warranty expense. 3)Record the cost of warranty repairs.

Explanation / Answer

Date General Journal Debit Credit 9/11/2014 Cash 530 sales 530 12/31/2014 Warranty expense 37 Estimated warranty liability 37 (530*7%) 7/24/2015 Estimated warranty liability 37 Repair parts inventory 37

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