Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

WBE Corp. manufactures a wide range of equipment. The company's biggest seller is the Whatchamacallit, which sells for $4,530 each. Starting in 2023 each

image

WBE Corp. manufactures a wide range of equipment. The company's biggest seller is the Whatchamacallit, which sells for $4,530 each. Starting in 2023 each Whatchamacallit now carries with it a two-year warranty against manufacturing defects. In addition to this warranty, customers can purchase an optional extended warranty for $1,680 extra that extends the Whatchamacallit's warranty an additional two years. From experience with similar products, WBE Corp. has determined that each Whatchamacallit sold will average $980 in replacement parts (ignore labour costs for repairs). In 2023, the company sells 600 Whatchamacallits; 250 of these customers decide to purchase the optional extended warranty. Assume the revenue is earned evenly over the two-year contract. Also in 2023, the company incurred $165,000 in total repair costs (replacement parts out of inventory). (a) Prepare the journal entry to record the sale of the Whatchamacallits and the extended warranties (sales would take place throughout the year; prepare only one entry at December 31, 2023 for the total sales). Ignore any cost of goods sold entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation cash Sales Revenue Unearned Revenue Debit Credit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

The journal entry is given below Account Title and Explanation Deb... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu

6th Canadian edition

013257084X, 1846589207, 978-0132570848

More Books

Students also viewed these Accounting questions

Question

What elements of multimedia-based instruction facilitate learning?

Answered: 1 week ago