On December 31, 2014, Dieker Company sells equipment to Tabor Inc. for $62,500.
ID: 2469771 • Letter: O
Question
On December 31, 2014, Dieker Company sells equipment to Tabor Inc. for $62,500. Dieker 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, 2014. Dieker estimates the prices to be $61,000 for the equipment and $1,500 for the cost of the warranty.
Date
Account Titles and Explanation
Debit
Credit
Dec. 31
Date
Account Titles and Explanation
Debit
Credit
Dec. 31
On December 31, 2014, Dieker Company sells equipment to Tabor Inc. for $62,500. Dieker 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, 2014. Dieker estimates the prices to be $61,000 for the equipment and $1,500 for the cost of the warranty.
Explanation / Answer
1.Cash................................................................................................62,500
Warranty Expense.............................................................................1,500
Warranty Liability............................................................................1,500
Sales Revenue...............................................................................62,500
b.Dieker should recognize $500 of warranty revenue in 2016 and 2017.Cash................................................................................................63,500
Warranty Expense.....................................................................................1,500
Warranty Liability.................................................................1,500
Sales Revenue....................................................................62,500
Unearned Service Revenue (Warranty)....................................1,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.