Bridgeport Equipment Limited sold 490 Rollomatics on account during 2020 for $5,700 each. Ignore any cost of goods sold. During 2020, Bridgeport spent $34,800 servicing the two-year warranties that are included in each sale of the Rollomatic. All servicing transactions were paid in cash.

Prepare the 2020 entries for Bridgeport using the assurance-type (expense-based) approach for warranties. Assume that Bridgeport estimates (accurately) that the total cost of servicing the warranties will be $139,200 for two years and payments for completed warranty repairs are paid in cash. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
Cash Warranty Revenue Cash or Inventory No Entry Warranty Liability Warranty Expense Sales Revenue Unearned Revenue Accounts Payable Accounts Receivable
Warranty Expense Cash Warranty Revenue Warranty Liability No Entry Cash or Inventory Sales Revenue Accounts Receivable Unearned Revenue Accounts Payable
(To record sales on account)
Cash Accounts Receivable Warranty Revenue Warranty Expense Warranty Liability Cash or Inventory Sales Revenue Unearned Revenue No Entry Accounts Payable
Sales Revenue Unearned Revenue Warranty Revenue Warranty Liability Accounts Payable Warranty Expense Accounts Receivable No Entry Cash Cash or Inventory
(To record payment of warranty expense)
Warranty Revenue Sales Revenue Warranty Expense Accounts Receivable Unearned Revenue Accounts Payable No Entry Warranty Liability Cash Cash or Inventory
No Entry Warranty Expense Accounts Receivable Cash Accounts Payable Warranty Liability Warranty Revenue Cash or Inventory Sales Revenue Unearned Revenue
(To accrue warranty expense)

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Prepare the 2020 entries for Bridgeport assuming that the warranties are not an integral part of the sale, but rather a separate service that is considered to be bundled with the selling price. Use the service-type (revenue-based) approach for warranties. Assume that of the sales total, $185,100 is identified as relating specifically to sales of warranty contracts. Bridgeport estimates the total cost of servicing the warranties will be $139,200 for two years. Because the repair costs are not incurred evenly, warranty revenues are recognized based on the proportion of costs incurred out of the total estimated costs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
Unearned Revenue Warranty Expense Sales Revenue Warranty Liability Accounts Receivable Warranty Revenue Cash or Inventory No Entry Cash Accounts Payable
Cash or Inventory Sales Revenue Unearned Revenue Warranty Expense Warranty Liability Warranty Revenue No Entry Cash Accounts Receivable Accounts Payable
Unearned Revenue No Entry Warranty Liability Accounts Receivable Warranty Revenue Cash or Inventory Accounts Payable Cash Sales Revenue Warranty Expense
(To record sales on account)
Accounts Receivable Warranty Revenue Sales Revenue Warranty Liability Cash No Entry Unearned Revenue Accounts Payable Warranty Expense Cash or Inventory
Warranty Expense Unearned Revenue Cash or Inventory No Entry Warranty Liability Cash Sales Revenue Warranty Revenue Accounts Payable Accounts Receivable
(To record payment of warranty expense)
Warranty Revenue Cash Unearned Revenue Warranty Expense Accounts Receivable Sales Revenue Warranty Liability No Entry Accounts Payable Cash or Inventory
Cash Warranty Expense Warranty Liability Warranty Revenue No Entry Accounts Payable Sales Revenue Accounts Receivable Cash or Inventory Unearned Revenue
(To remeasure unearned revenue)

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