Question

During 2017, Concord Outboards sold 180 outboard engines for $220 each. The engines are under a one-year warranty for parts and labor, and from past experience, the company estimates that, on average, warranty costs will equal $24 per engine. As of December 31, 2017, 60 engines had been serviced at a total cost of $1,410. During 2018, engines were serviced at a total cost of $2,910. Assume that all repairs used cash.

(a)

Prepare the journal entries that would be recorded at the following times:

(1)		During 2017 to record the sale of the engines.
(2)		During 2017 to accrue the contingent loss on warranties.
(3)		During 2017 and 2018 to record the actual warranty cost incurred.

(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 0 for the amounts.)

No.	Date	Account Titles and Explanation	Debit	Credit
(1)
		(Sold outboard engines.)
(2)
		(Estimated warranty expense.)
(3)
		(Made repairs under warranty.)
		(Made repairs under warranty.)

Answer 1