Brief Exercise 13-13 Stellar Factory provides a 2-year warranty with one of its

Question

Brief Exercise 13-13 Stellar Factory provides a 2-year warranty with one of its products which was first sold in 2017. Stellar sold $905,400 of products subject to the warranty. Stellar expects $117,280 of warranty costs over the next 2 years. In that year, Stellar spent $65,340 servicing warranty claims. Prepare Stellar's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures 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.) Date Account Titles and Explanation Debit Credit 2017 To record sales) During 2017 (To record warranty claims) 12/31/17 Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

2017 Cash 905400        Sales revenue 905400 During 2017 Warranty Expense. 65340         Inventory 65340 12/31/17 Warranty Expense 51940 =117280-65340          Warrant Liability 51940

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