Fenway Park LLC sold 150 color laser copiers in 2015 for $4,000 apiece, together
ID: 2487626 • Letter: F
Question
Fenway Park LLC sold 150 color laser copiers in 2015 for $4,000 apiece, together with a one-year warranty. Maintenance on each copier during the warranty period averages $300. (Must attempt both sections for full quality points) Instructions (a)Prepare entries to record the sale of the copiers and the related warranty costs, assuming that the accrual method is used. Actual warranty costs incurred in 2015 were $17,000. (b)On the basis of the data above, prepare the appropriate entries, assuming that the cash-basis method is used.
Explanation / Answer
Journal enteries..
A. Accrual basis
1. Debit Bank A/c(4000*150) 6,00,000
Credit sales 6,00,000
(Being laser copiers sold)
2. Debit Warranty Expense A/c 45,000
Credit Warranty Obligation 45,000
3. Debit Warranty Obligation A/c 17,000
Credit Cash 17,000
B. Cash Basis
1. Debit Bank A/c 6,00,000
Credit Sales A/c 6,00,000
2. Debit warranty Expense A/c 17,000
Credit bank 17,000
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