Cullumber Ltd. sells computers, computer accessories, and software. On its computer sales, the company provides a one-month 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 2024, the estimated costs related to the one-month warranties was $52,000, of whic $46,800 had been incurred before year end ($39,000 for replacement items and $7,800 in refunds). For an additional charge of $130, 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 2024, Computers Galore sold 1,040 two-ye warranties. The costs incurred during the year for replacements under these warranties amounted to $40,300. Based on experienc the company estimates that its total warranty costs over the two-year coverage period will be $78,000, which it expects will occur evenly over the warranty period. (a1) Prepare journal entries to record the warranty transactions for 2024. (Credit account titles are automatically indented when the amour entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entr before credit entries.) Account and explanation Debit Credit (To record estimated cost related to 1 month warranties) (To record cost incurred related to 1 month warranties) (To record sale of 2 year extended warranties) (To record cost incurred related to 2 year extended warranties) (To record warranty revenue)
Cullumber Ltd. sells computers, computer accessories, and software. On its computer sales, the company provides a one-month 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 2024, the estimated costs related to the one-month warranties was $52,000, of whic $46,800 had been incurred before year end ($39,000 for replacement items and $7,800 in refunds). For an additional charge of $130, 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 2024, Computers Galore sold 1,040 two-ye warranties. The costs incurred during the year for replacements under these warranties amounted to $40,300. Based on experienc the company estimates that its total warranty costs over the two-year coverage period will be $78,000, which it expects will occur evenly over the warranty period. (a1) Prepare journal entries to record the warranty transactions for 2024. (Credit account titles are automatically indented when the amour entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entr before credit entries.) Account and explanation Debit Credit (To record estimated cost related to 1 month warranties) (To record cost incurred related to 1 month warranties) (To record sale of 2 year extended warranties) (To record cost incurred related to 2 year extended warranties) (To record warranty revenue)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10E
Related questions
Question
Transcribed Image Text:Cullumber Ltd. sells computers, computer accessories, and software. On its computer sales, the company provides a one-month
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 2024, the estimated costs related to the one-month warranties was $52,000, of whic
$46,800 had been incurred before year end ($39,000 for replacement items and $7,800 in refunds).
For an additional charge of $130, 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 2024, Computers Galore sold 1,040 two-ye
warranties. The costs incurred during the year for replacements under these warranties amounted to $40,300. Based on experienc
the company estimates that its total warranty costs over the two-year coverage period will be $78,000, which it expects will occur
evenly over the warranty period.
(a1)
Prepare journal entries to record the warranty transactions for 2024. (Credit account titles are automatically indented when the amour
entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entr
before credit entries.)
Account and explanation
Debit
Credit
(To record estimated cost related to 1 month warranties)
(To record cost incurred related to 1 month warranties)
(To record sale of 2 year extended warranties)
(To record cost incurred related to 2 year extended warranties)
(To record warranty revenue)
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College