Brief Exercise 13-13 Larkspur Factory provides a 2-year warranty with one of its

Question

Brief Exercise 13-13 Larkspur Factory provides a 2-year warranty with one of its products which was first sold in 2017. Larkspur sold 1,044,600 of products subject to the warranty. Larkspur expects $135,320 of warranty costs over the next 2 years. In that year, Larkspur spent $74,380 servicing warranty claims. Prepare Larkspur'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.) Date Account Titles and Explanation Debit Credit 2017 To record sales) During 2017 To record warranty claims) 12/31/17 Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Journal Entries Date Account Title and explanation Debit Credit a 2017 Cash $            10,44,600        To Sales $               10,44,600 (To Record the sales) 2017 Warranty Expenses $               1,35,320    To Estimated Warranty Payables $                 1,35,320 (To Record the warranty Expenses) During 2017 Estimated Warranty Payables $                  74,380          To Inventory $                     74,380 (To Record the warranty Claims) December 31, 2017            "No Entry" $                            -

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