On August 1, 2016, Pereira Corporation has sold, on account, 1,700 Wiglows to Mendez Company at $480 each. Mendez also purchased a 1-year service-type warranty on all the Wiglows for $12 per unit. In 2016, Pereira incurred warranty costs of $9,000. Costs for 2017 were $8,400.

Required:

1.

Prepare the journal entries for the preceding transactions.

2.

CHART OF ACCOUNTS

Pereira Corporation

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
230	Unearned Warranty Revenue
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
438	Warranty Revenue

EXPENSES

500

Cost of Goods Sold

511

Insurance Expense

512

Utilities Expense

521

Salaries Expense

532

Bad Debt Expense

540

Interest Expense

541

Depreciation Expense

551

Warranty Expense

559

Miscellaneous Expenses

910

Income Tax ExpensePrepare the necessary journal entries to record:

	1. the sale of Wiglows and service warranty on account on August 1, 2016
	2. the warranty costs paid during 2016
	3. the warranty revenue earned in 2016
	4. the warranty costs paid during 2017
	5. the warranty revenue earned in 2017
	Additional Instructions

Show how Pereira would report the items on the December 31, 2016, balance sheet. Additional Instructions

Pereira Corporation

Partial Balance Statement

December 31, 2016

1	Current Liabilities:
2