Warranty Contracts in Journal Entries
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Leo corporation sells DVD players. The corporation also offers its customer a two year warranty contract. During 2012, Leo sold 20,000 warranty contracts at $99.00 each. The corporation spent 180,000 serving warranties during 2012, and it estmates that an additional $900,000 will be spent in the future to service the warranties. Prepare Leo jornal entries for (a) the sales of contracts, (b) the cost of serving the warranties, and (c) the recognition of warranty revenue.
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The expert examines warranty contracts in journal entries.
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(a) Cash 1,980,000
Unearned Warranty Revenue
(20,000 X ...
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- BA, Ain Shams University, Cairo Egypt
- MBA, California State University, Sacramento
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