Question

1. Appliance Plus sold 1,000 refrigerators during 2020 at a total price of $ 1,620,000, with a warranty guarantee that the product was free from any defects. The cost of the refrigeratetors sold was S 1,080,000. The term of the assurance warranty is one year, with an estimated cost of $ 10,000. In addition, Appliance Plus sold extended warranties on 600 refrigerators for four years beyond the one-year period for $ 210,000. Instructions Prepare the journal entries to record the sale and related warranties for 2020.

Answer 1

the following are the required journal entries:

sno	accounts	debit	credit
1	cash a/c	$1,620,000
	.........To sales revenue a/c		1,620,000
	(assuming sale was for cash)
2	cost of goods sold a/c	1,080,000
	........To mechandise inventory a/c		1,080,000
	(to record cost of goods sold)
3.	warranty expense a/c	10,000
	.........To warranty liability a/c		10,000
	(to record regular warranty)
4.	cash a/c	210,000
	........To deferred extended warranty a/c		210,000
	(to record extended warranty)