Brief Exercise 13-14 Skysong Corporation sells DVD players. The corporation also

Question

Brief Exercise 13-14 Skysong Corporation sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2017, Skysong sold 20,000 warranty contracts at $105 each. The corporation spent $189,000 servicing warranties during 2017 and it estimates that an additional $945,000 will be spent in the future to service the warranties. Prepare Skysong's journal entry for the sale of contracts. Assume the service costs 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.) Account Titles and Explanation Debit Credit LIST OF ACCOUNT LINK TO TEXT Prepare Skysong's journal entry for the cost of serviang the warranties. Assume the service costs are inventory costs. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

Explanation / Answer

Account Titles and Explanation Debit Credit Cash (20000 x $105) 2100000 Unearned warranty revenue 2100000 (To record sale of warranty contracts) Account Titles and Explanation Debit Credit Warranties expense 189000 Inventory 189000 (To record warranty service costs)

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