Question

On September 1, Home Store sells a mower (that costs $310) for $610 cash with a one-year warranty that covers parts. Warranty expense is estimated at 9% of sales. On January 24 of the following year, the mower is brought in for repairs covered under the warranty requiring $43 in materials taken from the Repair Parts Inventory.

Required:
Prepare the September 1 entry to record the mower sale (and cost of sale) and the January 24 entry to record the warranty repairs.

Answer 1

Answer:  Please find answer in explanation column

Explanation:

1. To record the  sale of mower.

Date      Account Titles and explanation        Debit            Credit

Sep 1       Cash                                            $610  

                          Sales revenue                                       $610

2.Journal To record the cost of mower sales

Date      Account Titles and explanation        Debit            Credit

Sep 1 Cost of Goods Sold                     $310  

                       Inventory                                               $310

3.Journal To record the warranty expense

Date      Account Titles and explanation        Debit            Credit

Sep 1 Warranty expense                          $54.90

     Estimated warranty liability                                        $54.90  

Calculation

Warranty expense = $610 X 9%=$54.90  

4.Journal to  record the cost of the  warranty repairs.

Date      Account Titles and explanation        Debit            Credit

Jan 24   Estimated warranty liability              $43

             Repair parts inventory                                          $43