Nash Company sells a machine for $7,300 with a 12-month warranty agreement that requires the company to replace all defectiveparts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the companysells 480 machines in 2025 (warranty expense is incurred half in 2025 and half in 2026). As a result of product testing, the companyestimates that the total warranty cost is $338 per machine ($148 parts and $190 labor).Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the followingfacts? Use "Inventory" account to record the parts portion of the warranty expense.(a)Sale of machinery and warranty expense incurred in 2025. (If no entry is required, select "No Entry" for the account tities and enter Ofor the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries

Sales revenue= $7,300×480= $3,504,000 Warranty expense= (480×$338)/2= 162,240/2= $81,120 Inventory=…

Answered: Nash Company sells a machine for $7,300…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 10E

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