Problem 13-7

Whispering Company sells a machine for $6,980 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 600 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 $429 per machine ($194 parts and $235 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 O for the entered. Do not indent manually. Account Titles and Explanation Debit Credit (To record sale) (To record warranty expense)