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Sarasota Company sells a machine for $7,220 with a 12 -month warranty agreement that requires the company to replace all defective parts and to provide
Sarasota Company sells a machine for $7,220 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 740 machines in 2025 (warranty expense is incurred half in 2025 and half in 2026). As a result of product testing, the company estimates that the total warranty cost is $446 per machine ( $202 parts and $244 labor). Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the following facts? Use "Inventory" account to record the parts portion of the warranty expense. (a) Sale of machinery and warranty expense incurred in 2025. (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. List all debit entries before credit entries.) Warranty accrual on December 31, 2025. (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. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Save for Later Attempts: 0 of 5 used Submit Answer (c) Warranty costs incurred in 2026. (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. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit What amount, if any, is disclosed in the balance sheet as a liability for future warranty costs as of December 31,2025 ? Warranty liability $
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