On January 1, 2023, Sunland Ltd. scd on account 1,100 units of its product for a total price of $549,000 with a warranty guarantee that the products were free of any defects. The products have a one-year assurance-type warranty and Sunland estimates that the cost will be $23,800. The cost of the units is $467,000. In addition, the company sold extended warranties related to 500 units for a one-year period beyond the one-year assurance period at a cost of $14,800. By the company's year-end, December 31, 2023, no warranty costs were incurred. By the company's year-end, December 31, 2024, $9.545 of warranty costs were incurred and paid in cash. Prepare the appropriate journal entries for 2023 and 2024. For the December 31, 2024 entry concerning the extended warranty, use the accounts Unearned Revenue and Warranty Revenue. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

On January 1, 2023, Sunland Ltd. scd on account 1,100 units of its product for a total price of $549,000 with a warranty guarantee that the products were free of any defects. The products have a one-year assurance-type warranty and Sunland estimates that the cost will be $23,800. The cost of the units is $467,000. In addition, the company sold extended warranties related to 500 units for a one-year period beyond the one-year assurance period at a cost of $14,800. By the company's year-end, December 31, 2023, no warranty costs were incurred. By the company's year-end, December 31, 2024, $9.545 of warranty costs were incurred and paid in cash. Prepare the appropriate journal entries for 2023 and 2024. For the December 31, 2024 entry concerning the extended warranty, use the accounts Unearned Revenue and Warranty Revenue. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

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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On January 1, 2023, Sunland Ltd. sold on account 1,400 units of its product for a total price of $537,000 with a warranty guarant that the products were free of any defects. The products have a one-year assurance-type warranty and Sunland estimates that th cost will be $25,800. The cost of the units is $447,000. In addition, the company sold extended warranties related to 400 units for one-year period beyond the one-year assurance period at a cost of $15,200. By the company's year-end, December 31, 2023, no warranty costs were incurred. By the company's year-end, December 31, 2024, $9,545 of warranty costs were incurred and paid cash. Prepare the appropriate journal entries for 2023 and 2024.
Pharoah Company sold 10,100 Super-Spreaders on December 31, 2025, at a total price of $1,070,600, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $585,800. The assurance warranties extend for a 2-year period and are estimated to cost $36,600. Pharoah also sold extended warranties (service-type warranties) related to 2,000 spreaders for 2 years beyond the 2-year period for $12,000. Given this information, determine the amounts to report for the following at December 31, 2025: sales revenue, warranty expense, unearned warranty revenue, warranty liability, and cash. Amounts Reported in Income $ Amounts Reported on the Balance Sheet
On January 1, 2023, Sheridan Ltd. sold on account 800 units of its product for a total price of $549,000 and a cost of $477,000. The products have a one-year assurance-type warranty and Sheridan estimates that the cost will be $25,800. By the company's year-end December 31, 2023, actual warranty costs related to the products sold was $18,400, paid in cash. Prepare all appropriate journal entries including the sale of merchandise. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit
Skysong Factory provides a 2-year warranty with one of its products which was first sold in 2025. Skysong sold $997,500 of products subject to the warranty. Skysong expects $120,250 of warranty costs over the next 2 years. In that year, Skysong spent $71,080 servicing warranty claims. Prepare Skysong's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) Date During 2025 12/31/25 Account Titles and Explanation (To record payment for warranty costs incurred) (To record sales) Debit Credit 1
On January 1, 2023, Sheridan Ltd. sold on account 800 units of its product for a total price of $575,000 and a cost of $493,000. The products have a one-year assurance-type warranty and Sheridan estimates that the cost will be $23,000. By the company's year-end December 31, 2023, actual warranty costs related to the products sold was $18,500, paid in cash. Prepare all appropriate journal entries including the sale of merchandise. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date January 1/23 January 1/23 December 31/23 Account Titles and Explanation Accounts Receivable Warranty Expense Sales Revenue Unearned Revenue (To record the sale) Cost of Goods Sold Inventory (To record the cost of goods sold) Unearned Revenue Warranty…
Blossom Company sold 10,500 heavy-duty spreaders on July 1, 2023, at a total price of $1,850,000, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $420,000. The assurance warranties extend for a two-year period and are estimated to cost $38,000. Blossom also sold extended warranties (service-type warranties) related to 1.500 spreaders for two years beyond the two-year period for $13,500. Prepare the journal entries that Blossom should make in 2023 related to the sale and the related warranties. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Date July 1, 2023 July 1, 2023 Account Titles and Explanation (To record cash sale) I (To record the cost of goods sold). Debit Credit 100 10
On December 31, 2022, Delta Company sells equipment to Tchefunkte Inc. for $125,000. Delta includes a 1-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2022. Delta estimates the prices to be $122,000 for the equipment and $3,000 for the cost of the warranty. In addition to the assurance warranty, Delta sold an extended warranty for an additional 2 years for $3,000. How much warranty revenue should Delta recognize in 2022?
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Talarczyk Company sold 10,000 Super-Spreaders on December 31, 2020, at a total price of $1,000,000, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $550,000. The assurance warranties extend for a 2-year period and are estimated to cost $40,000. Talarczyk also sold extended warranties (service-type warranties) related to 2,000 spreaders for 2 years beyond the 2-year period for $12,000. Given this information, determine the amounts to report for the following at December 31, 2020: sales revenue, warranty expense, unearned warranty revenue, warranty liability, and cash.
On January 1, 2020, Sheridan Ltd. sold on account 800 units of its product for a total price of $575,000 and a cost of $493,000. The products have a one-year assurance-type warranty and Sheridan estimates that the cost will be $23,000. By the company’s year-end December 31, 2020, actual warranty costs related to the products sold was $18,500, paid in cash.Prepare all appropriate journal entries including the sale of merchandise. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit January 1/20 (To record the sale) January 1/20December 31/20 (To record the cost of goods sold)…
New Age Computers manufactures and sells pagers and radio paging systems which include a 180-day assurance warranty on product defects. The company estimates the value of the 180-day warranty to be $3,000. New Age also sells an extended warranty which provides an additional two years of protection. On May 10, the company sold a paging system for $4,500 with an extended warranty for another $1,400. The journal entry to record this transaction would be: OA. B. OD. Cash Sales revenue Unearned warranty revenue Cash Accounts receivable Sales revenue Service revenue Cash Sales revenue Cash Sales revenue Unearned warranty revenue Debit 5,900 Debit 4,500 1,400 Debit 8,900 Debit 8,900 Credit 4,500 1,400 Credit 4,500 1,400 Credit 8,900 Credit 7,500 1,400
On January 2, 2025, Sunland Company sells production equipment to Bramble Inc. for $54,000. Sunland includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2025. During 2025, Sunland incurs costs related to warranties of $940. At December 31, 2025, Sunland estimates that $680 of warranty costs will be incurred in the second year of the warranty. (a) Prepare the journal entry to record this transaction on January 2, 2025, and on December 31, 2025 (assuming financial statements are prepared on December 31, 2025). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit