On December 31, 2014, Grando Company sells production equipment to Fargo Inc. fo
ID: 2475605 • Letter: O
Question
On December 31, 2014, Grando Company sells production equipment to Fargo Inc. for $90,000. Grando 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. Grando estimates the prices to be $87,840 for the equipment and $2,160 for the cost of the warranty.
Prepare the journal entry to record this transaction on December 31, 2014.
Repeat the requirements for (a), assuming that in addition to the assurance warranty, Grando sold an extended warranty (service-type warranty) for an additional 2 years (2016–2017) for $1,440.
On December 31, 2014, Grando Company sells production equipment to Fargo Inc. for $90,000. Grando 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. Grando estimates the prices to be $87,840 for the equipment and $2,160 for the cost of the warranty.
Explanation / Answer
a)
b)
Date Account Title & Explaination Debit Credit December 31, 2014 Cash 90000 Warranty Expenses 2160 Warranty Liability 2160 Sales Revenue 90000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.