On September 1, Home Store sells a mower (that costs $200) for $500 cash with a one-year warranty that covers parts. Warranty expense is estimated at 8% of sales. On January 24 of the following year, the mower is brought in for repairs covered under the warranty requiring $35 in materials taken from the Repair Parts Inventory. Prepare the September 1 entry to record the mower sale (and cost of sale) and the January 24 entry to record the warranty repairs.

Question

Business

Scott Walls

7 February, 03:49

On September 1, Home Store sells a mower (that costs $200) for $500 cash with a one-year warranty that covers parts. Warranty expense is estimated at 8% of sales. On January 24 of the following year, the mower is brought in for repairs covered under the warranty requiring $35 in materials taken from the Repair Parts Inventory. Prepare the September 1 entry to record the mower sale (and cost of sale) and the January 24 entry to record the warranty repairs.

+4

Answers (1)

Know the Answer?

Tito · Answer 1

Answer and Explanation:

The journal entries are shown below:

On Sep 1

Cash $500

To Sales revenue $500

(Being the sale is recorded))

On Sep 1

Cost of goods sold $200

To Finished goods inventory $200

(Being the the cost of mower sales is recorded)

On Sep 1

Warranty expense (8% * $500) $40

To Warranty liability $40

(Being the estimated warranty expense is recorded)

On Jan 24

Warranty liability $35

To Repair parts inventory $35

(being the cost of warranty repairs is recorded)