Problem 13 7 Crane Company sells a machine for $7,080 with a 12 month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers With sales being made evenly throughout the year, the company sells 580 machines in 2017 (warranty expense is incurred half in 2017 and half in 2018) As a result of product testing, the company estimates that the warranty cost is $430 per machine ($190 parts and $240 labor) Use Inventory account to record the warranty expense Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the following facts Sale of machinery and warranty expense incurred in 2017 (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 ) Account Titles and Explanation Debit Credit (To record sale) (To record warranty expense) LINK TO TEXT Warranty accrual on December 31, 2017 (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 ) Account Titles and Explanation Debit Credit LINK TO TEXT Warranty costs incurred in 2018 (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 ) Account Titles and Explanation Debit Credit LINK TO TEXT What amount, if any, is disclosed in the balance sheet as a liability for future warranty costs as of December 31, 2017 Warranty liability $ Click if you would like to Show Work for this question Open Show Work

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Problem 13-7 Crane Company sells a machine for $7,080 with a 12-month warranty agreement that requires the company to replace all defective parts and to

Problem 13-7

Crane Company sells a machine for $7,080 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 580 machines in 2017 (warranty expense is incurred half in 2017 and half in 2018). As a result of product testing, the company estimates that the warranty cost is $430 per machine ($190 parts and $240 labor). Use "Inventory" account to record the warranty expense. Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the following facts?

Sale of machinery and warranty expense incurred in 2017. (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.)

Account Titles and Explanation	Debit	Credit


(To record sale)



(To record warranty expense)

LINK TO TEXT

Warranty accrual on December 31, 2017. (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.)

Account Titles and Explanation	Debit	Credit

LINK TO TEXT

Warranty costs incurred in 2018. (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.)