23

Larkspur Factory provides a 2-year warranty with one of its products which was first sold in 2017. Larkspur sold $1,044,600 of products subject to the warranty. Larkspur expects $135,320 of warranty costs over the next 2 years. In that year, Larkspur spent $74,380 servicing warranty claims. Prepare Larkspur'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 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 24

The Sarasota Company issued $390,000of11% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds were issued at98.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Sarasota Company records straight-line amortization semiannually. (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. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Question 25

Marigold Corporation issued a 4-year, $39,000,4% note to Greenbush Company on January 1, 2017, and received a computer that normally sells for $30,530. The note requires annual interest payments each December 31. The market rate of interest for a note of similar risk is11%.

Prepare Marigold's journal entries for (a) the January 1 issuance and (b) the December 31 interest. (Round answers to 0 decimal places, e.g. 38,548. 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.)