CraneEquipment Company sells computers for $1,760each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold860computers.

Based on past experience, the company has estimated the total 2-year warranty costs as $40for parts and $60for labor. (Assume sales all occur at December 31, 2020.)

In 2021,Craneincurred actual warranty costs relative to 2020 computer sales of $10,800for parts and $16,200for labor.

(a)

Under the expense warranty approach, give the entries to reflect the above transactions (accrual method) for 2020 and 2021.(Credit account titles are automatically indented when the amount is entered.Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

2020

Warranty Liability

Inventory

Accounts Receivable

Warranty Expense

Sales Revenue

Cash, Accrued Payroll

Accounts Receivable

Warranty Liability

Sales Revenue

Warranty Expense

Cash, Accrued Payroll

Inventory

(To record sale of computers)

2020

Sales Revenue

Warranty Expense

Warranty Liability

Inventory

Cash, Accrued Payroll

Accounts Receivable

Cash, Accrued Payroll

Sales Revenue

Inventory

Accounts Receivable

Warranty Expense

Warranty Liability

(To record liability against warranty costs)

2021

Sales Revenue

Warranty Expense

Cash, Accrued Payroll

Accounts Receivable

Inventory

Warranty Liability

Warranty Liability

Warranty Expense

Sales Revenue

Accounts Receivable

Inventory

Cash, Accrued Payroll

Warranty Liability

Accounts Receivable

Inventory

Sales Revenue

Cash, Accrued Payroll

Warranty Expense