769629module itemjd12594201 Kieso Intermediate Accounting 16

769629?module itemjd-12594201 Kieso, Intermediate Accounting, 16e Help I CALCULATOR PRINTER VERSION BACK Exercise 13-11 Early in 2017, Nash Equipment Company sold 400 Rollomatics during 2017 at $6,600 each. During 2017, Nash spent $20,000 servicing the 2 year assur ance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis. Prepare 2017 entries for Nash. Assume that Nash 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 Prepare 2017 entries for Nash assuming that the warranties are not an integral part of the sale (a service- that of the sales total, $61,000 relates to sales of waranty contracts. Nash estimates th be $60,000 for 2 years. Estimate for the account titles and enter O for the amounts. Credit entered. Do not indent manually, Round intermediate calculations to 5 decianal places, e.g. 1.54657 ansivers to o type warrantv). Assume e total cost of servicing the warranties wil revenues to be recognized on a straight-Ine basis. (f no entry is required, select \"No Entry account titles are automatically indented when amount is 01977N10084T places,e.g. 5,125) ort sc nsert 40

Solution

2017 Entries for Nash: Date Account titles and explanations Debit Credit Cash (400*6600) 2640000 Sales 2640000 (Recorded sales revenue) Warranty expense 20000 Cash 20000 (Amount spent on warranties Warranty expense (60000-20000) 40000 Estimated Liabilities warranties 40000 (Estimated warranty expense) 2017 Entries for Nash assuming that the warranties are not an integral part of the sale Date Account titles and explanations Debit Credit Cash (400*6600) 2640000 Sales 2579000 Unearned warranty revenue 61000 (Recorded sales revenue) Warranty expense 20000 Cash 20000 (Amount spent on warranties Unearned warranty revenue 20333 Warranty revenue (20000/60000)*61000 20333 (Warranty revenue recognised based on the ratio of warrnty expenses to estimated warranty)