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E13-11 (Warranties) Selzer Equipment Co. sold 500 Rollomatics during 2012 at $6,000 each. During 2012, Selzer spent $30,000 servincing the 2-year warranties that company the
E13-11 (Warranties) Selzer Equipment Co. sold 500 Rollomatics during 2012 at $6,000 each. During 2012, Selzer spent $30,000 servincing the 2-year warranties that company the Rollomatic. All applicable transactions are on a cash basis. (a) Prepare 2012 entries for Selzer using the expenses warranty approach. Assume that Selzer estimates the total cost of servicing the warranties will be $120,000 for 2 years. (b) Prepare 2012 entries for Selzer assuming that the warranties are not an integral part of the sale. Assume that of the sales total, $160,000 relates to sales of warranties contracts. Selzer estimates the total cost of servincing the warranties will be $120,000 for 2 years. Estimated revenues earned on the basis of costs incurred and estimated costs
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