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Sunland Ltd . sells computers, computer accessories, and software. On its computer sales, the company provides a one - month warranty that is included in
Sunland Ltd sells computers, computer accessories, and software. On its computer sales, the company provides a onemonth warranty that is included in the cost of the computer. Claims under the warranties vary from replacing defective items to providing customers with refunds if they choose. During the estimated costs related to the onemonth warranties was $ of which $ had been incurred before year end $ for replacement items and $ in refunds
For an additional charge of $ Computers Galore also offers extended warranty coverage for two years on its computers. This amount is expected to cover the costs associated with the extended warranties. During Computers Galore sold twoyear warranties. The costs incurred during the year for replacements under these warranties amounted to $ Based on experience, the company estimates that its total warranty costs over the twoyear coverage period will be $ which it expects will occur evenly over the warranty period.
a
Prepare journal entries to record the warranty transactions for Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select No entry" for the account titles and enter for the amounts. List all debit entries before credit entries
Account and explanation
Debit
Credit
To record estimated cost related to month warranties
To record cost incurred related to month warranties
To record sale of year extended warranties
To record cost incurred related to year extended warranties
To record warranty revenue
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