Early in $2025,$ Vaughn'Equipment sold $500$ Rollomatics at $$6,300$ each. During $2025,$ Vaughn spent $$21,000$ servicing the $2-$year assurance warranties with inventory, cash, and payables that accompany the Rollomatic. All sales transactions are on a cash basis.

$($a$)$

Your answer is correct.

Prepare $2025$ entries for Vaughn. Assume that Vaughn estimates the total cost of servicing the warranties in the second year will be $$31,000.($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. List all debit entries before credit entries.$)$

Date

Account Titles and Explanation

Debit

Credit

Cash

$($To record sales$)$

Prepare $2025$ entries for Vaughn assuming that the warranties are not an integral part of the sale $($a service$-$type warranty$).$

Assume that of the sales total, $$53,000$ relates to sales of warranty contracts. Warranty costs incurred in $2025$ were $$21,000.$

Estimate revenues to be recognized on a straight$-$line basis. $($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. Record journal entries in the order presented in the problem. List all debit entries before credit entries.$)$

Date

Sale

Account Titles and Explanation

Accounts Receivable

Sales Revenue

$($To record the sale and related warranties$)$

Warranty Expense

$($To record payment for warranty costs incurred$)$

Debit

Credit

Accounts Receivable

Sales Revenue

$($To record the sale and related warranties$)$

Warranty Expense

Sales Revenue