Urgent help on accounting homework please? At the beginning of 20X3, Shingles Ro

Question

Urgent help on accounting homework please?

At the beginning of 20X3, Shingles Roofing had a liability for warranties of $7,000 on the books. During 20X3, Shingles Roofing had sales of $310,000. The company estimates that the cost of servicing products under warranty will average 2.5% of sales. Expenditures (all in cash) to satisfy warranty claims during 20X3 were $6,200, of which $2,500 was for products sold in 20X3.

a.) Prepare the journal entries for sales revenue and the related warranty expense for 20X3. Assume all sales are for cash.

b.) Prepare the journal entry for the warranty expenditures.

c.) Compute the December 31, 20X3, ending balance in the Liability for Warranties account.

Explanation / Answer

Urgent help on accounting homework please? (Please note all values in USD) At the beginning of 20X3, Shingles Roofing had a liability for warranties of $7,000 on the books. During 20X3, Shingles Roofing had sales of $310,000. The company estimates that the cost of servicing products under warranty will average 2.5% of sales. Expenditures (all in cash) to satisfy warranty claims during 20X3 were $6,200, of which $2,500 was for products sold in 20X3. a.) Prepare the journal entries for sales revenue and the related warranty expense for 20X3. Assume all sales are for cash. Cash A/c DR 310000 To Sales A/c 310000 Warranty Costs A/c 7750 To Provision for Warranty A/c 7750 b.) Prepare the journal entry for the warranty expenditures. Provision for Warranty A/c DR 6200 To Cash/Bank A/c 6200 Prior Period Expenses A/c DR 3700 To Provision for Warranty A/c 3700 c.) Compute the December 31, 20X3, ending balance in the Liability for Warranties account. Opening Warranty Liability as on 1 January 20X3 7000 Current Year Provisions 7750 Warranty Claims paid in the current year Pertaining to previous years -3700 Pertaining to 20X3 -2500 -6200 Closing Warranty Provision as on 31 December 20X3 8550

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