On September 1, 2019, Carolina Electronics Company has 1,120 Blu ray players ready for sale On October 1, 2019, 870 are sold, for cash, at $130 each with a 1 year assurance type warranty Carolina estimates that the warranty cost on each Blu ray player sold will probably average $10 per unit During the final 3 months of 2019, Carolina incurred warranty costs of $3,250, and in 2020 warranty costs were $5,450 Required 1 Prepare the journal entries for the preceding transactions 2 Show how the preceding items would be reported on the December 31, 2019, balance sheet 3 Prepare the journal entries for the preceding transactions using the modified cash basis method 4 Next Level Which method produces the better measure of income Why CHART OF ACCOUNTS Carolina Electronics Company General Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 240 Estimated Warranty Liability 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales 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 Expense 1 Prepare the necessary journal entries to record 1 The sale of Blu ray players on October 1, 2019 2 The related warranty accrual on October 1, 2019 3 The warranty costs paid during the last quarter of 2019 4 The warranty costs paid during the 2020 General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST REF DEBIT CREDIT 1 2 3 4 5 6 7 8 3 Prepare the necessary journal entries to record the above transactions using the modified cash basis method General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST REF DEBIT CREDIT 1 2 3 4 5 6 2 Show how the items would be reported on the December 31, 2019, balance sheet under U S GAAP Balance Sheet Instruction CAROLINA ELECTRONICS COMPANY Partial Balance Sheet December 31, 2019 1 Current Liabilities 2

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Posted on Sep 29, 2024

On September 1, 2019, Carolina Electronics Company has 1,120 Blu-ray players ready for sale. On October 1, 2019, 870 are sold, for cash, at $130

On September 1, 2019, Carolina Electronics Company has 1,120 Blu-ray players ready for sale. On October 1, 2019, 870 are sold, for cash, at $130 each with a 1-year assurance-type warranty. Carolina estimates that the warranty cost on each Blu-ray player sold will probably average $10 per unit. During the final 3 months of 2019, Carolina incurred warranty costs of $3,250, and in 2020 warranty costs were $5,450.

Required:

1.	Prepare the journal entries for the preceding transactions.
2.	Show how the preceding items would be reported on the December 31, 2019, balance sheet.
3.	Prepare the journal entries for the preceding transactions using the modified cash basis method.
4.	Next Level Which method produces the better measure of income? Why?

CHART OF ACCOUNTS

Carolina Electronics Company

General Ledger

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

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
240	Estimated Warranty Liability
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales

	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 Expense

1. Prepare the necessary journal entries to record:

	1. The sale of Blu-ray players on October 1, 2019
	2. The related warranty accrual on October 1, 2019
	3. The warranty costs paid during the last quarter of 2019
	4. The warranty costs paid during the 2020