On September 11, 2016, Home Store sells a mower for $530 with a one-year warrant

Question

On September 11, 2016, Home Store sells a mower for $530 with a one-year warranty that covers parts. Warranty expense is estimated at 7% of sales. On July 24, 2017, the mower is brought in for repairs covered under the warranty requiring $37 in materials taken from the Repair Parts Inventory.

Prepare the September 11, 2016, entry to record the mower sale, and the July 24, 2017, entry to record the warranty repairs. (Round your answers to 2 decimal places.)

1

Record the mower sales.

2

Record the estimated warranty expense.

3

Record the cost of warranty repairs.

Explanation / Answer

CALCULATION OF WARRANTY EXPENSES SALES $                        530 Warranty Expenses estimated = 7% of % 530 = $                     37.10 Journal Entries Date Account Title and explanation Debit Credit Sept, 11 2016 Cash Account $                  530.00     To Sales $                     530.00 (To Recod the sale of Mower) Sept, 11 2016 Warranty Expenses $                     37.10          To Estimarted Warranty Liability $                       37.10 (To Record the estimated warranty is 7% of Sales) Estimated Warranty Liabilitiy $                     37.00 July, 24 2017       To Inventory $                       37.00 (Being repair of the mower in warranty)

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