Bonita Company sold 202 color laser copiers on July 10, 2020, for $4,270 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $331. Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020. Actual warranty costs (inventory) incurred in 2020 were $17,150.

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Business

Hazel Rivers

18 May, 09:17

Bonita Company sold 202 color laser copiers on July 10, 2020, for $4,270 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $331. Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020. Actual warranty costs (inventory) incurred in 2020 were $17,150.

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Esperanza Kerr · Answer 1

On Jul. 10,2020, the cash (debit) and the sales revenue (credit) we have; 200 * $4,270 = 854,000 respectively.

During the year 2020 = > Warranty expense (debit) = 17,150 and the inventory (credit) = 17,150.

On Dec. 31,2020, the Warranty expense (debit) = (200 * $331) - 17150 = 49,050 and the Warranty Liability (credit) = 49,050.

Explanation:

Given that; The price that the color laser copiers was sold = $4,270 apiece, years of warranty = 1-year warranty, price of maintenance on each copier during the warranty period is estimated = $331, and the Actual warranty costs (inventory) incurred in 2020 = $17,150.

Therefore, the entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020 is given below:

On July 10, 2020, the cash (debit) and the sales revenue (credit) we have; 200 * $4,270 = 854,000 respectively.

During the year 2020 = > Warranty expense (debit) = 17,150 and the inventory (credit) = 17,150.

On December 31, 2020, the Warranty expense (debit) = (200 * $331) - 17150 = 49,050 and the Warranty Liability (credit) = 49,050.