On January 2, 2020, Flint Company sells production equipment to Fargo Inc. for $54,000. Flint includes...

 

Transcribed Image Text:

On January 2, 2020, Flint Company sells production equipment to Fargo Inc. for $54,000. Flint includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Flint incurs costs related to warranties of $940. At December 31, 2020, Flint estimates that $680 of warranty costs will be incurred in the second year of the warranty. (a) Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020 (assuming financial statements are prepared on December 31, 2020). (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 O for the amounts.) Date Account Titles and Explanation Debit Credit (b) Repeat the requirements for (a), assuming that in addition to the assurance warranty, Flint sold an extended warranty (service- type warranty) for an additional 2 years (2022-2023) for $760. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit On January 2, 2020, Flint Company sells production equipment to Fargo Inc. for $54,000. Flint includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Flint incurs costs related to warranties of $940. At December 31, 2020, Flint estimates that $680 of warranty costs will be incurred in the second year of the warranty. (a) Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020 (assuming financial statements are prepared on December 31, 2020). (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 O for the amounts.) Date Account Titles and Explanation Debit Credit (b) Repeat the requirements for (a), assuming that in addition to the assurance warranty, Flint sold an extended warranty (service- type warranty) for an additional 2 years (2022-2023) for $760. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit

Answer rating: 100% (QA)

Answer a Statement Showing Journal Entries Debit nt Showing Journal Entries Particulars Date Particu... View the full answer