Exercise 13-11

Early in 2017, Crane Equipment Company sold 500 Rollomatics during 2017 at $5,500 each. During 2017, Crane spent $18,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.

Prepare 2017 entries for Crane. Assume that Crane estimates the total cost of servicing the warranties will be $50,000 for 2 years. (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.)

Date

Account Titles and Explanation

Debit

Credit

 At SaleDuring 2017Dec. 31, 2017

 At SaleDuring 2017Dec. 31, 2017

 At SaleDuring 2017Dec. 31, 2017

Prepare 2017 entries for Crane assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, $51,000 relates to sales of warranty contracts. Crane estimates the total cost of servicing the warranties will be $50,000 for 2 years. 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. Round intermediate calculations to 5 decimal places, e.g. 1.54657 answers to 0 decimal places, e.g. 5,125.)

Date

Account Titles and Explanation

Debit

Credit

 At SaleDuring 2017Dec. 31, 2017

 At SaleDuring 2017Dec. 31, 2017

 At SaleDuring 2017Dec. 31, 2017

(To record warranty revenue)

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