Question

Exercise 13-10 Bridgeport Company sold 196 color laser copiers on July 10, 2020, for $3,670 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $319. 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 $17,370. (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 choose a transaction date enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount choose a transaction date enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount choose a transaction date enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount Click if you would like to Show Work for this question: Open Show Work

Answer 1

July 10, 196 copiers sold

Dr Cash (or accounts receivable) 719,320

Cr Sales revenue 719,320

July 10, warranty expense provision

Dr Warranty expense 62,524

Cr Warranty liability 62,524

December 31, 2020, actual warranty costs

Dr Warranty liability 17,370

Cr Inventory (repair parts) 17,370

Instead of inventory (repair parts), wages payable could have been credited. Since we are not given any details on how the company spent the money, it is impossible to allocate the costs properly.

Since the warranty has not expired yet (it expires July 9, 2021), the company cannot recognize any gains from unused warranty liability.

Step-by-step explanation:

July 10, 196 color laser copiers at $3,670

estimated warranty expense during the year = $319 per unit x 196 = $62,524

actual warranty costs = $17,370