Exercise 13-11 Early in 2017, Skysong Equipment Company sold 500 Rollomatics dur

Question

Exercise 13-11 Early in 2017, Skysong Equipment Company sold 500 Rollomatics during 2017 at $6,300 each. During 2017, Skysong spent $21,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. Prepare 2017 entries for Skysong. Assume that Skysong estimates the total cost of servicing the warranties will be $52,000 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 SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare 2017 entries for Skysong assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, $53,000 relates to sales of warranty contracts. Skysong estimates the total cost of servicing the warranties will be $52,000 for 2 years. Estimate revenues to be recognized on a straight-line basis. (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. Round intermediate calculations to 5 decimal places, e.g. 1.54657 answers to 0 decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit (To record warranty revenue)

Explanation / Answer

Part 1 - Journal entry worksheet

Part 2 -Journal entry worksheet if warranty are not integral part of sales

Date Journal Debit Credit MM/DD/YY Cash $3150000 Sales revenue $3150000 (Recording of sales of rollomatics = (500 * $6300) MM/DD/YY Warranty expenses $21000 Cash $21000 (Recording of amount spent on servicing during the year) MM/DD/YY Warranty expense $31000 Estimated liabilities warranties $31000 (Estimation of remaining warranty expenses ($52000 - $21000)

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