Exercise 13-11 - ***ONLY NEED ANSWERS FOR QUESTION MARKS - ALL OTHER ANSWERS ARE CORRECT***

Early in 2017, Larkspur Equipment Company sold 600 Rollomatics during 2017 at $5,700 each. During 2017, Larkspur spent $20,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.

Part 1: Prepare 2017 entries for Larkspur. Assume that Larkspur estimates the total cost of servicing the warranties will be $57,000 for 2 years.

Date	Account Titles	Debit	Credit
At Sale	Cash	3,420,000
	Sales Revenue		3,420,000
During 2017	Warranty Expense	20,000
	??????? (NOT CASH)		20,000
12/31/17	Warranty Expense	37,000
	Warranty Liability		37,000

Part 2: Prepare 2017 entries for Larkspur assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, $58,000 relates to sales of warranty contracts. Larkspur estimates the total cost of servicing the warranties will be $57,000 for 2 years. Estimate revenues to be recognized on a straight-line basis.

Date	Account Titles	Debit	Credit
At Sale	Cash	3,420,000
	Sales Revenue		3,362,000
	Unearned Warranty Revenue		8,000
During 2017	Warranty Expense	20,000
	??????? (NOT CASH)		20,000
12/31/17	Unearned Warranty Revenue	???????
	Warranty Revenue		???????
	(To record warranty revenue)
	Warranty Expense	???????
	Warranty Liability		???????
	(To record warranty liability)